2/7/2018. Disclaimer. Taxes 101- Webinar for Service Providers. Today s Agenda SETTING THE STAGE

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1 Taxes 101- Webinar for Service Providers Alica Whitmore, Outreach Coordinator, Prepare + Prosper Nick Xanthopoulos, Staff Attorney, Mid-Minnesota Legal Aid Mary Jo Katras, Program Leader, Family Resiliency, University of Minnesota Extension Disclaimer This presentation is for educational purposes only. It is meant to accompany an oral presentation and not to be used as a standalone document. This presentation is based on the facts and circumstances being discussed, and on the laws in effect when it is presented. It does not supersede or alter any provisions of Minnesota laws, administrative rules, court cases, or revenue notices. Prepare + Prosper Tax Credits The Power of Tax Time Important Dates Free Tax Preparation Today s Agenda Where s My Refund Resources Q +A SETTING THE STAGE Taxes can be complicated. Use this information as a starting point. You are an educator, not a tax preparer. It s okay to share information about taxes and tax-time resources, but stay away from offering tax advice. You have an important role. You can help people make the most of tax time. 1

2 POLL How have you or has your organization helped people at tax time in the past? We provide outreach materials. We host a free tax preparation clinic in our site. We haven t in the past but are looking forward to doing something this year. Other WHO WE ARE: PREPARE +PROSPER 532 volunteers 12, people are give 26,873 hours received $1.5 million Lead the Financial reaching financial filing 26,654 $24.7 million in saved by 984 Access in Reach goals financial returns refunds people (FAIR) initiative coaching program WHO WE ARE: University Of Minnesota Extension Center For Family Development WHO WE ARE: MID-MN LEGAL AID Legal Aid Tax Law Project represents low income taxpayers before the Internal Revenue Service Audits, United States Tax Court, identity theft, tax debt collection, innocent spouse, injured spouse, systemic issues Generally does not prepare tax returns 2

3 About the Dec federal tax law Most changes affect tax years: (additional) child tax credit: taxpayer(s) and qualifying child(ren) must have social security numbers standard deductions increase personal and dependency exemptions reduced to $0 no deduction for moving expenses no deduction for alimony payments Starting 2019, shared responsibility payment eliminated TAX QUIZ 1. How much in refunds was returned to Prepare + Prosper customers in 2017? a) 17.5 million b) 5.8 million c) 24.7 million d) 2.1 million 2. How many taxpayers eligible for the Earned Income Tax Credit don t claim it every year in MN? a) 1 in 2 b) 1 in 3 c) 1 in 4 d) 1 in 5 3. True or false: A tax refund can account for 30% or more of a household s entire annual income. 4. True or false: Volunteers at free tax preparation sites have to be IRS-certified. TAX CREDITS The Earned Income Tax Credit, plus others can be a financial springboard. Earned Income Tax Credit (EITC) Child credits TAX CREDITS TO KNOW Education credits Property Tax Refund Premium Tax Credit 3

4 IRS offset bypass refund (OBR) If taxpayer has past-due federal tax debt, IRS will take 2017 tax refund and apply it to that debt unless financial hardship example: taxpayer needs refund to stop eviction OBR requires Taxpayer Advocate Service (TAS) assistance: file 2017 IRS tax return, IRS form 911, and proof of hardship with local TAS office To learn more, please visit taxpayeradvocate.irs.gov EITC ELIGIBILITY TABLE # of qualifying children Single/head of household, income less than: Married filing jointly, income less than: Maximum credit (up to): 0 $15,010 $20,600 $510 1 $39,617 $45,207 $3,400 2 $45,007 $50,597 $5,616 3 or more $48,340 $53,930 $6,318 EARNED INCOME TAX CREDIT (EITC) The EITC is a federal tax credit for taxpayers who worked in 2017 and meet eligibility rules: You must have earned or self-employment income You and qualifying child(ren) must have a Social Security number If you are not claiming qualifying children, you must be between 25 and 65 You must have been a United States citizen or resident alien the entire year You cannot be anyone else s qualifying child 1 IN 5 DON T CLAIM THE EITC People who are: living in rural areas self-employed receiving certain disability pensions or have children with disabilities without a qualifying child not proficient in English grandparents raising their grandchildren recently divorced, unemployed, or experienced other changes to their marital, financial or parental status 4

5 EITC DELAY SAME IN 2018 Federal tax refunds will take longer for EITC and Additional Child Tax Credit (ACTC) recipients IRS will begin processing refunds Feb. 15 Prevent against fraud and identity theft No one can get you refund faster File taxes as planned CHILD TAX CREDITS Child Tax Credit (CTC) Tax credit for families that work and claim a child age 16 or younger Additional Child Tax Credit (ACTC) Eligible for CTC, but cannot claim it because taxes are too low More than $3,000 earned income and at least 1 qualifying child Maximum credit amount $1,000 per child WHO IS A QUALIFYING DEPENDENT * A qualifying dependent can be a qualifying child or a qualifying relative Every situation is unique and specific, in order to be a qualifying dependent the individual must pass the tests of: Relationship Age Residency Support *This is a general guideline. Some exemptions could apply. It s based on YOUR personal situation! MN K-12 EDUCATION CREDIT The cost of school supplies can add up. Keep your receipts for tax time savings! Maximum credit amount $1,000 per child Who is eligible? Dependents in grade K-12 Meet income limits, which is $37,500 for families with one to two children and $2,000 higher for each additional child beyond two Have itemized receipts of expenses (see handout for qualifying expenses) 5

6 AMERICAN OPPORTUNITY CREDIT Helps make postsecondary education more affordable Covers qualifying expenses, like tuition, fees, required course materials. Enrolled at least half time Must have 1098-T and itemized receipts LIFETIME LEARNING CREDIT Non-refundable credit available for unlimited amount of years for students. Covers qualifying expenses, like tuition and fees. Must have 1098-T PROPERTY TAX HOMEOWNERS Household income less than $110,650 Owned home on both January 2, 2017 and Jan 2, 2018 Need a 2017 Property Tax Statement from county (receive in March) Maximum credit amount $2,710 for homeowners Based on income and property taxes paid in 2017 RENTERS Household income less than $59,960 Need a Certificate of Rent Paid (CRP) from landlord (receive by Jan 31, 2018) Maximum credit amount $2,100 for renters Based on income and property taxes paid in 2017 PREMIUM TAX CREDIT This is to make health care more affordable for all Minnesotans. You and every family member listed on your return must have health coverage for the year or qualify for an exemption To qualify, you must have purchased health insurance through MNsure and need Form 1095-A Individuals on Medicare, Medical Assistance, or Minnesota care are not eligible. HELP SPREAD THE WORD! Order Outreach Materials 6

7 LEARN ABOUT TAX CREDITS Online Tax Credit Guide THE POWER OF TAX TIME Low and moderate-income individuals and families depend on their tax refund. WHAT WE HEAR FROM P+P TAXPAYERS USE TAX TIME TO SAVE $500- $1,000 7% Do you have any money in savings? $ % <$500 39% None 44% If you get a refund, will you save some today? No refund 10% No 22% Yes 68% Use direct deposit Open a savings account Purchase a savings bond Split some of the tax refund 7

8 IMPORTANT DATES Employers Send W-2s January 31 Tax Day usually April Property Refund Due August 15 Extended Tax Returns Due mid-october IRS-certified volunteers, who are passionate about taxes will help you get the maximum refund FREE TAX PREPARATION DO YOU QUALIFY? Annual income qualifications: Individuals = $35,000 or less Families = $55,000 or less Self-employed = $55,000 or less FIND A TAX SITE Appointment Sites Visit prepareandprosper.org or call Starting in January 11 Walk-in sites Everyone present at sign-in time has a chance to be served, order is randomized through a computer program. Self-employment sites Those who made more than $6000 must make an appointment at P+P main office tax clinic Open Mondays & Wednesdays 8

9 Free Tax Preparation Sites Free Tax Preparation Sites Qualifying taxpayers can get free help preparing their federal and state income tax returns at locations across Minnesota if any of the following are true: Annual income $54,000 or less Age 60 or older Speak limited to no English Disabled Free Tax Preparation Sites Free Tax Preparation Sites Our website, has a list of active free tax preparation sites. Type Free Tax Prep in the Search box. You can also call or (toll-free) 9

10 Where s My Refund? Where s My Refund? Where s My Refund? Where s My Refund? 10

11 Where s My Refund? Where s My Refund? State Tax Forms Where can I get forms? Up-to-date forms can be found on our website, Order forms by calling or (toll-free) UNITED WAY United Way can help someone locate a free tax preparation site in their community. CALL Toll Free: Local:

12 MYFREETAXES.COM MyFreeTaxes allows households who made $66,000 or less in 2017 to file their federal, state, and property taxes for free. Print outreach materials from their website to display near your computers. FINANCIAL EDUCATION RESOURCES The Consumer Financial Protection Bureau (CFPB) has resources just for libraries! Program ideas Outreach materials Training webinars Partnership guidebooks Claim it! campaign MyFreeTaxes Taxes 101 training Weekly Tax Tip Videos IRS Where s My Refund Resources for Taxpayers (CFPB) Become a free tax prep site in 2018 United Way ( ) RESOURCES QUESTIONS 12

13 THANK YOU 13