Last Minute Deductions

Online Exclusive posted Wednesday, April 11, 2012 – 1:25pm

Tax credits and deductions for the disabled.

April 17, the last day to file taxes, is fast approaching. But last-minute filers with disabilities shouldn’t despair. Thanks to funding from the Walmart Foundation, eligible taxpayers across the nation still have time to maximize their tax refunds and file their federal and state taxes online or in person for free through tax filing provider MyFreeTaxes.com .

Five Credits and Deductions:

1.     File and get all the tax credits and deductions you deserve. Did you know you could be leaving money on the table by not filing your taxes? Many taxpayers with disabilities who receive federally funded benefits wrongly fear that a tax refund will jeopardize their benefits. But the fact is, tax refunds are not counted as income when determining other federally funded public benefits. So by not filing taxes, you may be missing out on tax credits for which you are eligible and leaving money that is rightfully yours unclaimed. One in five Americans fail to claim the Earned Income Tax Credit (EITC) each year. You do not need to be married, have children, owe taxes or give up your public benefits to get the EITC. You just need to have earned less than $50,000 in income from employment or self-employment, be between the ages of 25-65, and file a tax return. Calculate your EITC benefits by visiting http://bit.ly/mytaxbackapp. For a helpful list of other tax credits and deductions you may be eligible for, visit http://bit.ly/taxcreditlist.

 2.   Skip the tax preparer and file online or onsite, in-person for free. You’ll have to gather all relevant documents and receipts whether you do your taxes yourself or pay a preparer. If you earned below $57,000 in 2011, use MyFreeTaxes.com to file both your federal and state taxes. MyFreeTaxes.com  provides easy-to-follow directions and saves your work at every step. If you earned less than $50,000 in 2011, you can take advantage of free, in-person Volunteer Income Tax Assistance (VITA) sites through United Way in more than 100 communities nationwide. Enter your zip code on  to locate the nearest free filing center or call 2-1-1.

3.     Avoid late payment penalties. If you owe taxes, you’re probably waiting until the last minute to file. Rushing through the process can increase your chances of making a mistake and may cause you to miss out on your highest possible deductions. With only a short time left, prepare your documents now. Check out www.MyFreeTaxes.com <http://bit.ly/taxlist>  for a handy checklist to help get your taxes in order.

4.     Keep your receipts. In particular, those having to do with your vehicle (gas, parking, repairs, auto registration), medical expenses, charity donations, and business expenses, especially if you are self-employed or have incomes outside your full-time job. These expenses may reduce your self-employment income, which means you pay less in taxes.

5.     Save your refund for rainy days. Your refund is not a gift from the IRS – it is part of what you earned.  Use it wisely. Get your refund deposited directly into your savings account or use it to order paper bonds. One in four people in the US are unbanked or underbanked and savings bonds can make an ideal refund option for people not receiving public benefits.  Series I Savings Bonds have a current 3.06% rate that’s better than most savings accounts.

While tax refunds are not counted as income for publicly funded benefits, refunds can be counted as assets after a period of time (often nine months) if the refund puts you above the benefit asset limit (often $2,000 per individual/$3,000 per couple but can vary from state to state). If you receive federally funded public benefits such as SSI and your tax refund takes you over the $2,000 asset limit, you may want to look into qualifying for and opening an Individual Development Account (IDA), a federally-matched savings account and financial education program that helps you save for a home, college, job training or starting a business. Important note: If you receive publicly funded benefits and wish to open an IDA, you need to make sure you work with a program that receives federal IDA funding so the asset limit for publicly funded benefits will not apply. If you open an IDA not funded with federal dollars, funds will count toward the $2,000 asset limit ($3,000 for couples) and can affect or cause you to lose benefits.

Do your homework and find a federally funded IDA provider near you through the federal Office of Community Services in the U.S. Department of Health and Human Services

 

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