Free Tax Service Assists Seniors, Disabled Vets

From Newstips.org reports

A free tax preparation service for low-income families is expanding to assist seniors and disabled veterans who would not normally file a tax return. They need to file this year in order to receive federal economic stimulus payments.

“A lot of seniors and disabled veterans are calling in with questions and visiting” tax preparation sites, said Raisa Allaire of the Center for Economic Progress. The Center operates free services staffed by volunteers to help low-income families claim earned income tax credits.

“Unfortunately some IRS information can be a little confusing, especially to people who are traditionally non-filers,” Allaire said.

Post-Season Assistance for Non-filers

The Center is also working with the state to offer post-tax season filing assistance for non-filers, who have until October 15 to file a return in order to claim the stimulus payment, Allaire said. They plan to offer mobile tax help in senior centers and health centers and train staff of organizations serving these groups. “A lot of this population is less mobile,” she said.

Last year the Center helped over 30,000 Illinois taxpayers claim over $43 million in earned income tax credits. The group sponsors tax preparation assistance in 40 communities across the state, with 15 sites in Chicago, staffed by about 1,000 volunteers. It assists families with incomes under $40,000 and individuals who earn under $15,000, helping them claim tax credits that are worth as much as $4,716 this year.

The refunds come without the tax preparation fees which paid preparers charge. These often amount to over $200 and can be far more if taxpayers are sold refund anticipation loans.

New Federal Funding

The effort is limited by funding and staffing issues, said David Marzahl, executive director of the Center. “We probably turn away one person for every two we serve,” he said. “Demand is always outstripping supply.”

So it’s good news that Congress recently allocated $8 million in federal funding for volunteer tax assistance programs, which will come into play next year.

For years advocates have been calling for federal funding for such programs, led by the National Community Tax Coalition, a project of the Center for Economic Progress that has over 600 affiliates in 50 states. The Coalition also pushes for better regulation of paid tax preparers and restrictions on refund anticipation loans.

Restricting RALs

One victory came last year when the IRS banned RALs from the agency’s Free File program, which refers visitors to the IRS website to tax preparers and software programs. Now the IRS is considering strengthening regulations on RAL marketing.

“It’s almost impossible to tell how much [an RAL] is going to cost,” said Marzahl.

He said RAL’s give paid tax preparers a “perverse incentive” to inflate refunds, since that increases their fees, though it can cause serious problems for taxpayers down the line.

“We see people who’ve gotten burned [by RALs] every day,” Marzahl said.