1. One tip that will save you 75% on back to school shopping

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    Parents, it’s back to school season again. As you plan how to make the most of your money here’s one tip that could help put some money back in your pocket. What’s the tip? It’s simple, really. Save your receipts. This small step may help you claim a sizable tax credit called the Minnesota K-12 Education Credit. How do you tell if you can claim it? Why, I thought you’d never ask! About the Minnesota K-12 Education Credit Like many tax credits, there is a maximum household income limit for the K-12 Education Credit, which is $37,500 for families with one or two children. The max income limit increases by $2,000 for each additional child. (Is your income too high for the credit? Check out the K-12 Education Subtraction.) If you meet the income requirements, you may claim a tax credit worth up to 75% of qualified educational expenses for your child in grades K-12. The most you can claim back is $1,000 for each child in grades K-12. How it works Let’s look at how the credit works with a typical back to school shopping list: Educational Expenses Cost Pencils, pens, erasers $12 Crayons, markers, highlighters $10 Notebooks, loose leaf paper, note cards $8 3-ring binders, folders $9 Scissors, glue, calculators $11 Gym clothing (as required by the school) $50 Home computer (up to $200 allowed to be claimed) $200 Total educational expenses $300 Total expenses multiplied by 75% $225 K-12 Education Credit amount: $225 In this example, a family spending $300 on […]
  2. Free tax sites open in the Twin Cities this summer

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    Looking for ways to file for free this summer? Full details below.   AccountAbility Minnesota 2610 University Ave. W., Suite 450 St. Paul, Mn   55114 County: Ramsey Site availability: 5/4/2013 – 10/15/2013 Days open: Visit www.accountabilitymn.org or call 651-287-0187 Language(s): sign-language, Spanish Appt or walk in: walk-in only Phone: 651-287-0187 Accessibility: handicap accessible Comments: For dates or more information: www.accountabilitymn.org or 651-287-0187   Clues- Minneapolis 720 E. Lake Street Minneapolis, MN   55407 County: Hennepin Site availability: 5/21/2013 – 10/22/2013 Days open: every other Tuesday Hours open: 1:00 pm – 4:00 pm Language(s): Spanish Appt or walk in: by appt. Only Phone: 612-746-3500 Accessibility: handicap accessible Comments: site offers assistance with current and prior year returns.   Hennepin County Government Center 300 S. 6th Street- Skyway Level Minneapolis, MN   55487 County: Hennepin Site availability: 4/30/2013 – 11/15/2013 Days open: Tuesday, Wednesday Hours open: 9:00 am – 1:00 pm Appt or walk in: walk-in only Accessibility: handicap accessible Comments: call 612-348-4100 for information only   The Family Partnership 1100 Andersen Lane Minneapolis, MN   55407 County: Hennepin Site availability: 5/2/2013 – 10/10/2013 Days open: every other Thursday Hours open: 9:30 am – 2:30 pm Language(s): Spanish Appt or walk in: appointments preferred Phone: 612-341-1609   West 7th Community Center 265 Oneida Street St. Paul, MN   55102 County: Ramsey Site availability: 5/15/2013 – 9/11/2013 Days open: Wednesday Hours open: 9:00 am – 11:00 am Appt or walk in: by appt. Only Phone: 651-298-5493 Accessibility: handicap accessible   Minneapolis Urban League 2100 Plymouth Ave. N. […]
  3. Martha’s story

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    In 2001, Martha became a homeowner and dealt with everything that goes along with homeownership: property taxes, deductions, exemptions, etc. Like many people, she was overwhelmed and intimidated about her taxes and paid a lot of money—money she didn’t really have—for someone else to prepare them. Martha’s income level qualified her for free tax preparation and she was pleasantly surprised to get a large refund. Martha got her taxes done for free and saved her more than $200 in tax preparation services. She said the free tax prep volunteers were friendly, professional and helpful and she felt “so comfortable” asking questions about her tax forms. “My annual refund is now a steady part of my income,” Martha said, who works at Family & Children’s Service in Minneapolis. She spends her professional day helping people as a Family Life Education Specialist. Martha also spends her personal day helping others: she’s made several referrals to Claim It!  She said her goal is “to make sure hard-working people don’t get taken advantage of during a stressful situation.” Thank you to Greater Twin Cities United Way for this story. GTCUW attacks poverty in the Twin Cities through 10 measurable goals across three focus areas: Basic Needs, Health and Education. One goal is increasing the income of hardworking families in our community.
  4. Counterview: 3 Situations When You Should Request an Extension

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    Last week, we covered 3 reasons why it’s better to file on time before April 15, rather than request an extension from the IRS. This week, we’ll cover three situations where requesting an extension is a good idea. Situation #1: Your tax situation got more complicated than you thought Life changes and so can your tax situation. Perhaps you got married last year or had a divorce. Or maybe you declared bankruptcy, foreclosed on a home, and so on. Major life events like these could change how you file taxes, making it a good idea to file for an extension so that you have extra time to understand your tax situation. If an extension on your return means the different between a correct and incorrect tax return, then request an extension. Situation #2: Some of your tax documents are missing In a perfect world, all of your tax documents would march straight into your designated tax return folder, making it easy to stay organized when doing your taxes. Unfortunately, sometimes your tax documents can get lost or have a mistake. In cases where you need extra time to get your tax documents straightened out, requesting an extension can help. Situation #3: Something else becomes more pressing than filing by April 15 Sometimes we try our best to file on time, but life can throw you a curve ball and suddenly you have to attend to a personal emergency. In cases where your personal life has become overwhelming, requesting another six months to file […]
  5. 3 Reasons You Should File Taxes on Time (and Not Request an Extension)

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    April 15 is Tax Day. It’s the day by which the IRS requires those who owe taxes to file and pay taxes. It’s also well dreaded by every procrastinator during this time of year. While there is an option to request an extension to file by October 15, 2013, here are three good reasons why you shouldn’t. Reason #1: You pay interest on any owed taxes, even if you extend If you owe taxes to the IRS and file for an extension, the IRS will still calculate interest on your outstanding balance. That’s because a tax extension is meant to give you extra time to prepare a completely accurate tax return, but the IRS will not wait around to receive the taxes you owe. To avoid these penalties and interest payments, it’s best to pay in full as soon as you can, preferably by April 15. Reason #2: Filing as soon as possible protects you from identity theft If you’re due a refund and extend, you won’t have to worry about any late payment interest or penalties. But waiting to claim your refund could expose you to a rapidly growing problem: identity theft. According to the IRS, identity theft cases involving stolen Social Security numbers to collect other people’s tax refunds soared to 449,809 in 2012, up more than 80% from the previous year. Taxpayers usually don’t realize their identities have been stolen until they try to file and their return is rejected by the IRS. Bottom line: The longer you […]
  6. Free Tax Clinics Come to the Karen Community

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    Filling out tax forms can be overwhelming for just about anyone, but for newly arrived refugees, it’s nearly impossible. Without assistance from qualified tax preparers, refugees are prone to making mistakes that can trigger an audit or keep them from getting their full refund. This year, the Minnesota Department of Revenue is hosting two free tax clinics at Karen Organization of Minnesota (KOM) to help refugees from Burma file their federal, state and property tax returns. Paula Gizachew and Chue Yee of the Department of Revenue assisted 18 households during the first tax clinic held on February 22. Paw Moo, who arrived in the United States in 2012, said she was very grateful to receive help since she did not feel confident filling out the tax forms by herself. “In here, it feels safer because they help you with everything,” she said. She was excited to learn she will receive a refund this year and said she plans to keep the money in savings “just in case.” While all appointments at KOM’s tax clinics have been filled, refugees needing tax assistance are welcome to visit another site in the metro area. (Refugees who do not speak English should bring their own interpreter or find a tax site that provides interpreters.) The Minnesota Department of Revenue operates several free tax clinics for low income people through a grant from the U.S. Department of the Treasury. Services are provided by staff and volunteers from the Department of Revenue at no cost to participants. To learn […]
  7. 5 common tax mistakes that can cost you the EITC (a summary)

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    According to the IRS, an estimated 20 to 25% of qualified workers fail to claim the EITC each year. Are you making any of these mistakes on your taxes? It could cost you the EITC. You can click each topic to get more information. Mistake #1: You didn’t file taxes (because you didn’t need to) The EITC can only be claimed by filing a tax return but some workers miss out because they don’t earn enough to be required to file taxes. Let’s be clear, there’s a difference between when you need to file taxes and when you should file taxes. As a general rule, anyone who had taxes taken out of their wages or could qualify for the EITC and other refundable credits should look into filing their taxes. Mistake #2: You didn’t think you were eligible For many people, they might miss out on the EITC because they weren’t eligible last year so they think they aren’t eligible this year. However, if you had any changes to your family size, income, marital status, take another look. You just might be eligible this year. Mistake #3: You previously claimed the EITC without being eligible Never claim the EITC when you’re not supposed to! If the IRS finds that you fraudulently claimed the EITC, you cannot claim EITC for the next 10 years. For those that hire someone to prepare your taxes, it’s important to have an honest tax preparer. If your tax preparer does anything on your tax return that seems like fraud, run – […]
  8. 5 tax mistakes that’ll cost you the EITC: part 5

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    You didn’t claim dependents that you could have It might seem like common sense to claim your own child, but for some non-traditional families, the lines on who counts can get a bit blurry. And that’s how some families can miss out on the EITC. Who should watch out Grandparents, uncles, aunts, foster parents, step-parents, and others taking care of children should take notice. For the EITC, the following children might be eligible to be claimed as a dependent: Your son, daughter, adopted child, stepchild, foster child (placed by court or an authorized placement agency) or a descendent of any of them such as your grandchild Brother, sister, half brother, half sister, step brother, step sister or a descendant of any of them such as a niece or nephew Secondly, any claimed child dependents for the EITC must meet the IRS’s definition of a qualifying child. Because rules on claiming dependents on your tax return can be complicated, we always recommend talking to a tax professional if you’re ever unsure about if you can claim someone or not. Additional information for non-traditional families can be found on the eitcoutreach.org site.
  9. “Bundling” tax services with care

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    One of our great RSVP tax aide volunteers, Don, came striding down the hallway at the Mahube-Otwa Detroit Lakes office. He was carrying a small baby. He said, ” This little gal came in with her parents to have taxes filed. It is below zero outside today and she came in with no hat. There MUST be a baby hat here at Mahube that we can give her.” “You do that kind of thing, right?” As a Community Action Agency, Mahube-Otwa does very much do “that kind of thing.” Since Mahube-Otwa is the host site for the RSVP program, we have lots of hats and mittens and blankets for residents who are in need. So we fixed up the little baby girl with a new hat, baby mittens and a blanket. And her parents got their tax return e-filed along with all the tax credits for which they were eligible. This very young new family learned how to dress their new baby properly for Minnesota winters as their taxes were prepared. They also were given the opportunity to enroll in Early Head Start. This is what can happen when program silos get dismantled, and volunteers as well as staff members share in the community action mission. Mahube-Otwa is a non-profit that serves the community in Mahnomen, Hubbard, Becker, Otter Tail and Wadena counties and also hosts free tax preparation services. Special thanks to Karen Lenius, Senior Programs / RSVP Director at Mahube-Otwa for providing this story,  
  10. 5 tax mistakes that’ll cost you the EITC: part 4

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    Mistake 4: You didn’t take disability rules into consideration If you have, or your spouse or a child on your tax return has a disability, it could affect your eligibility for the EITC in a number of ways. Disability payments The IRS considers disability retirement benefits as earned income until you reach minimum retirement age. In contrast, Social Security Disability Insurance, SSI, or military disability pensions are not considered earned income. So depending on the kind of disability payment you receive, your income might be eligible to be calculated for the EITC. Claiming a disabled child Normally, you can only claim a child dependent for the EITC if s/he was younger than 19 (or under 24 if s/he’s a full-time student). But if you are claiming a child with a disability, there is no age limit as long as the child meets the IRS definition of “permanently and totally disabled”: Not being able to engage in any substantial gainful activity because of a medically determinable physical or mental condition; and A physician must certify the condition has lasted or is expected to last continuously for at least 12 months or to result in death Real-life example We had a customer whose daughter was 33, and normally couldn’t be claimed as a dependent for the EITC. However, her daughter was considered disabled under the IRS definition and the mother was able to claim her adult daughter for the EITC. If you have questions about how disability can affect your tax return, learn more at […]
  11. 5 tax mistakes that’ll cost you the EITC: part 3

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    Mistake 3: You previously claimed the EITC without being eligible Never claim the EITC when you’re not supposed to! If the IRS finds that you fraudulently claimed the EITC, you cannot claim EITC for the next 10 years. For those that hire someone to prepare your taxes, it’s important to have an honest tax preparer. If your tax preparer does anything on your tax return that seems like fraud, run – not walk – far, far away to a more honest one! What if I didn’t know I did a mistake? Even if you don’t intend to commit tax fraud, you’re not off the hook for not understanding tax rules. If IRS ever denies your EITC claim due to “reckless or intentional disregard of the EITC rules,” you will not be able to claim EITC for the next 2 years. Get professional help for free If you need help finding a honest, professional tax preparer, consider visiting a free tax preparation site in Minnesota. Most EITC eligible taxpayers are eligible to receive free tax help. If you have questions, you can also contact us by our contact form or Facebook.
  12. 5 tax mistakes that’ll cost you the EITC: part 2

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    Mistake 2: You didn’t think you were eligible For many people, they might miss out on the EITC because they weren’t eligible last year so they think they aren’t eligible this year. However, if you had any changes to your family size, income, marital status, take another look. You just might be eligible this year. Taxpayers without children can still claim the EITC One of the biggest misconceptions about the EITC is thinking it is only for people with children. That’s not necessarily true. Although they get a smaller refund, single workers without children making less than $13,980 in 2012 can qualify for up to $475 from the EITC. For married taxpayers without children, they can get the EITC as long as the household income is less than $19,190. Moderate income taxpayers can claim the EITC, too Another big misconception is that the EITC is only for low-income people. In reality, the EITC helps low- to middle-income workers. As an example, if a married couple with two kids made $42,000 last year, they could get an estimated $1,082 from the EITC. Remember, you can always check to see if you qualify under the 2012 EITC income and dependent guidelines. If you have questions, you can also contact us by our contact form or Facebook.
  13. 5 common mistakes that can cost you the EITC

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    According to the IRS, an estimated 20 to 25% of qualified workers fail to claim the EITC each year. We’ll be listing 5 of the top reasons that you might miss out on the EITC starting with number 1 this week. Mistake #1: You didn’t file taxes (because you didn’t need to) The EITC can only be claimed by filing a tax return but some workers miss out because they don’t earn enough to be required to file taxes. Let’s be clear, there’s a difference between when you need to file taxes and when you should file taxes. As a general rule, anyone that had taxes taken out of their wages or could qualify for the EITC and other refundable credits should look into filing their taxes. Some examples Take Mary, a single mother of two, who made $12,000 – just under the amount where she’s required to file taxes ($12,200 for Head of Household). Even though she isn’t required to file, we estimated that she could get $4,810 from the EITC! Just to drive this point a bit further, let’s take a look at Michael, who is single, has no kids, and made $1,500 last year. Even though he didn’t earn much and doesn’t need to file, he could claim an estimated $117 from the EITC when he does. Finding affordable tax preparation Getting your taxes done shouldn’t be costly. That’s why there are volunteers across Minnesota who help for free. Learn more about free tax prep in Minnesota.
  14. Ask the tax expert – What is earned income?

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    What is earned income? To claim the Earned Income Tax Credit, you need to have earned income. There are two ways to get earned income: You work for someone who pays you or You own or run a business or farm What counts as earned income? Income from a job. Wages, salaries, and tips are considered taxable earned income. Commissions and bonuses are also included as earned income. Union strike benefits Long-term disability benefits paid prior to reaching the minimum age of retirement are considered earned income. Self-employed earnings. If you are self-employed, your net earnings are your earned income. Combat pay. For those in the armed forces, combat pay may be counted as earned income. What doesn’t count as earned income? In general, any money that comes from investments or sources other than active work are considered “unearned.” These include: Pay received for work while an inmate in a penal institution Interests and dividends received Social security money Pensions Unemployement benefits Alimony Child support Still have questions? Ask us anything on Facebook or use our contact form!   Source: http://www.irs.gov/Individuals/What-is-Earned-Income%3F