I’m a CPA: 3 Questions Lower-Income Americans Should Ask Themselves Before Filing
Written by
Dawn Allcot
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Jenna Klaverweiden
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For lower-income Americans, Tax Day can come with stress and uncertainty. Filing taxes can be time-consuming and confusing if you aren’t familiar with the tax forms and codes. Hiring a tax professional can be cost-prohibitive. Do-it-yourself tax software can be confusing and difficult to use, especially if you’re trying to file from a phone if you don’t have a computer in your home.
Here’s the good news: You don’t actually have to file taxes if your gross income is below $15,750 for single filers or $31,500 for married couples, filing jointly, this year. But if you don’t file, you could miss out on a tax refund that could help you get ahead on bills, build emergency savings, or enjoy a fun or relaxing treat.
Gene Bott, CPA, partner at Kevin O’Leary’s Tax Hive, shared three questions lower-income Americans should ask before they file taxes this year.
Do I Qualify for the IRS Free File Program?
The IRS Free File program allows taxpayers with an adjusted gross income (AGI) under $89,000 to file for free electronically through IRS trusted partners. “For someone with a single W-2, or even multiple simple W-2s, do-it-yourself options like the IRS Free File program can help you keep more money in your pocket,” Bott said.
Taxpayers who meet certain income limits, those with disabilities or those who speak limited English qualify for in-person tax help through the Volunteer Income Tax Assistance (VITA) program. “This program often uses students in later college courses, so simple W-2 returns and somewhat more complex 1099 returns can often be handled by these programs for free,” Bott said.
Additionally, taxpayers 60 and older can consider the Tax Counseling for the Elderly program, per the IRS.
Did I Claim All the Credits I Deserve?
Tax credits like the Child Tax Credit, Credit for Other Dependents and Earned Income Tax Credit (EITC) all put money in taxpayers’ pockets.
“I’m surprised how often I see the EITC missed,” Bott said.
If you’re confused about claiming credits, Bott suggested speaking to a tax professional, since accuracy is important when it comes to these credits.
Are There Hidden Fees To Getting a Refund Advance or Early Refund?
Many tax software companies offer opportunities to get your refund immediately after filing in the form of a loan. You may also choose a tax software platform that offers early direct deposit, which puts money in your account a few days faster than waiting for the IRS.
If you’re using your tax refund to pay down higher-interest debt, using one of these services could be a savvy move, especially if you qualify for a tax refund advance loan with a 0% APR.
But make sure to read the fine print so you understand any fees or interest involved. “You should only use one of these services if you’re comfortable with the cost,” Bott warned.
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