Presenter: Megan Sullivan Director, Legal Aid Society of Columbus - - PowerPoint PPT Presentation

Presenter: Megan Sullivan Director, Legal Aid Society of Columbus msullivan@columbuslegalaid.org 614-737-0142

2

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

3

Services Provided

• Staff attorneys, offering a range of

services including:

• Counsel and advice
• Brief service
• Extended representation
• Referrals
• Pro Bono Programming

4

Helping Our Clients

• Domestic
• Public

Benefits

• Housing
• Consumer,

Bankruptcy, Foreclosure

• Tax

5

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

6

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!

7

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

8

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

9

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

• ther 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

10

Who can I claim on my return for the Earned Income Credit

Relationship

Your son, daughter, adopted child1, stepchild, foster child2 or a descendent of any of them such as your grandchild Brother, sister, half brother, half sister, step brother, step sister or a descendant

• f any of them such as a

niece or nephew

Age

At the end of the filing year, your child was younger than you (or your spouse if you file a joint return) and younger than 19 At the end of the filing year, your child was younger than you (or your spouse if you file a joint return) younger than 24 and a full-time student At the end of the filing year, your child was any age and permanently and totally disabled3

Residency

Child must live with you (or your spouse if you file a joint return) in the United States4 for more than half

• f the year

NO EXCEPTIONS!

• Except maybe a little

exception for temporary absences.

Joint Return

The child cannot file a joint return for the tax year unless the child and the child's spouse did not have a separate filing requirement and filed the joint return only to claim a refund.

11

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.

12

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

13

Filed Required Returns

• Filing Requirements (p. 1)
• Free Filing (p. 5)
• Choosing a Tax Preparer (p. 7)
• Check Your Own Transcript (p. 9)

14

Filing Requirements

• 2018 Federal Filing Requirements

If your filing status is... And at the end of 2018 you were... Then you must file a return if your gross income was at least... Single Under 65 $12,000 65 or older $13,600 Married filing jointly Under 65 (both spouses) $24,000 65 or older (one spouse) $25,300 65 or older (both spouses) $26,600 Married filing separately Any age $5 Head of household Under 65 $18,000 65 or older $19,600 Qualifying widow(er) with dependent child Under 65 $24,000 65 or older $25,300

Must file if you have $400 or more in self-employment income no matter what.

15

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

16

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.

17

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

18

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

19

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

20

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

21

What you learn from transcripts

• Unfiled tax returns
• Tax debts
• Existence of Liens
• ID theft or other issues with income being

reported to IRS

22

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

23

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?

24

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/

25

Self-Employed: Paying Estimated Taxes

• When are estimated taxes required?

– If you expect to owe a tax of $1000 or more when your return is filed

• Use last year’s tax return if this year will be

similar:

Tax due Plus Estimated tax payments made Minus Credits claimed on the return if you can claim them again Equals TOTAL Estimated Tax Quarterly tax payments = TOTAL/4

26

Help for Tax Problems

• The Low Income Taxpayer Clinic (“LITC”) at

the Legal Aid Society of Columbus offers free legal help (advice and/or representation) on federal (IRS) tax and some state and local tax matters.

• We never charge a fee for our services.
• We are not the Internal Revenue Service or

the Ohio Department of Taxation. Everything shared between you and our staff is completely confidential.

27

When to Ask for Help

• You believe the IRS is unfairly taking your tax refund
• You have not received your tax refund
• The IRS is trying to make you pay a debt you believe

your current or former spouse should be paying

• You received a notice from the IRS
• You have not filed one or more tax returns and think

you might be in trouble

• The IRS denied you the right to take a credit or

deduction and you think the IRS is wrong

• You owe the IRS and cannot pay