File Return to Take Advantage of Tax Credits
AMES, Iowa -- For many Iowans, tax time is the most important financial event of the year. Working families with moderate or low incomes qualify for important tax credits that frequently result in substantial tax refunds.
“This time of year our goal is to ensure Iowans take full advantage of the tax credits for which they are eligible,” said Barb Wollan, a family finance specialist with Iowa State University Extension and Outreach. “That requires two types of outreach. First, we want to make sure people are aware that they must file a tax return to take advantage of the credits. Second, we encourage people to spend little or no money in order to receive their credits.”
Families with children typically have the most to gain from filing their tax returns, but some benefits are available to lower-income households without children, as well. It’s true that some people may not be required to file a tax return, such as single individuals with income below $10,000 in 2013. However, Wollan said, they should file a return to take advantage of the tax credits.
“We work to make sure that people are aware of the benefits of filing a return,” said Wollan.
In addition, Wollan and her colleagues want consumers to be aware that there are options for filing tax returns for little or no cost. Most people with incomes below about $51,000 are eligible for free tax preparation by IRS-certified volunteers, through VITA -- Volunteer Income Tax Assistance -- and also the AARP Tax-Aide service. Iowans are encouraged to call 211 or go to http://irs.treasury.gov/freetaxprep/ to find a free tax clinic near them. ISU Extension and Outreach is actively involved in organizing VITA programs in a number of Iowa counties. For a list see http://www.extension.iastate.edu/humansciences/vita.
Another way for many income-eligible households to file taxes for free is through IRS FreeFile. With this program taxpayers do their own tax returns online, using software made available free by commercial vendors through the IRS. To learn more about FreeFile, go to www.irs.gov and select the FreeFile icon.
Most families with substantial tax refunds benefit from three key tax credits, Wollan continued. The Child Tax Credit of $1,000 per child below age 17 is available to most households with children. The American Opportunity Credit is available to households with full-time college students in their first four years of school. The Earned Income Tax Credit is available to people whose income is below certain limits, if they had income that they earned through work, and did not have investment income above $3,300. The income limits are related to the taxpayer’s number of children and marital status.