Free Filing
Published: January 24, 2017
New this year, clients can drop off their documents at the Center for Economic Progress sites, they will be completed by a tax preparer in about a week, and the client will be able to pick up the finished return.
Clients will also be able to do split returns into three accounts, including purchasing savings bonds. For example, if a client was supposed to receive a $1,000 tax return they could have $600 deposited to their checking account or prepaid card, $300 deposited into a savings account, and use $100 to purchase savings bonds.
This guide has a handy little savings sheet at the end which you can print out and give to participants to help them budget for their tax return - http://cfed.org/assets/pdfs/BOTW_VITA_
Earned Income Tax Credit
If you or your participants are wondering how much you might receive this year through the Earned Income Tax Credit (EITC), check out the EITC estimator attached or found online here: http://www.eitcoutreach.org/help/ in a bunch of languages. Important! All filers who claim the EITC or the Child Tax Credit will not receive your tax return until Feb. 17th. This may cause a hardship for some filers who rely on getting their tax return early. See https://www.irs.gov/uac/newsroom/irs-and-partners-look-to-start-of-2017-tax-season-encourage-use-of-irsgov-and-efile-warn-of-refund-delays for more information.
Scams and Refund Anticipation Checks/Loans
Refund Anticipation Check (RAC) and Loans (RALs) and the prepaid cards they’re offered on, can take huge bites out of your tax refund. Refund Anticipation Loans, or RALs, are short-term, high-cost bank loans secured by the taxpayer’s expected tax refund. The loans last about until the actual IRS refund repays the loan. Professional tax preparers as well as thousands of small independent preparers broker these loans on behalf of insured financial institutions. The RAL preparer will partner with a bank, which will use the borrower's projected income tax refund as security on the loan. A RAL preparer will typically charge tax preparation fees, loan administration fees and bank fees in addition to other fees that a borrower can avoid by filing directly with the IRS or using free software or the free tax preparation sites. See this article for more information: https://mobile.nytimes.com/2017/01/15/business/tax-refund-loans-are-revamped-and-resurrected.html
Signs of scams/predatory tax products include:
· # 1: Triple-Digit Interest Rates The annual interest rate of the predatory tax refund loan can be as high as 500%. These costly rates drain your hard-earned money.
· # 2: Excessive Fees In addition to a high APR, bad tax refund loans are often loaded with unnecessary “administrative” fees.
· # 3: Instant Cash Promises The idea of “instant cash” may sound good, but in reality refund anticipation loans only speed up the refund process by a few days.
· # 4: Larger Refund Guarantees Be wary of any tax preparer that guarantees a larger-than-expected refund, particularly if such promises come with more fees.
What to do with your tax refund?
If you or your participants are wondering what to do with your tax refund, consider printing out and using this short workbook: http://cfed.org/assets/pdfs