Tax season has come around again, and The River Center has been busy planning and training to offer free tax preparation for eligible taxpayers through our Volunteer Income Tax Assistance (VITA) program. Here are some tips to help you prepare for filing your taxes.
Beware of tax companies that promise free filing and then charge you at the end if your return is more than the simplest of re turns. All VITA sites such as The River Center’s program, which offers tax preparation to individuals and families with incomes under $58,000, are absolutely free. The IRS also offers Free File options through brand-name software or free fillable forms.
The American Rescue Plan Act (ARPA) expanded both the Child Tax Credit (CTC) and the Child and Dependent Care Credit (CDCC) for 2021, making both credits bigger, available to more families and fully refundable. This means if you owe taxes and the amount is less than the credit for which you are eligible, you get the rest of the credit back in a refund. For working or job-searching parents, the CDCC could mean potentially up to $4,000 for one child under 13 or up to $8,000 for two or more children.
For the CTC, almost all New Hampshire families were eligible for up to $3,600 for children 5 and under or $3,000 for those 6 to 17 years old, regardless of filing requirement. If you missed out on the payments or want to access the other half of what you are eligible for, you must file. If someone else received those payments when you should have, file to claim the whole amount.
Most people received this payment in January 2021. If you didn’t, you can only get it if you file a return.
You will get these if you received the Advance CTC payments (Letter 6419) or the third stimulus payment (Letter 6475). The IRS started mailing these letters out in December, and they are crucial to comparing what you got to what you should have received. If you misreport these amounts, this could mean a processing time by the IRS of 20 to 26 weeks. Accuracy counts more than ever this year.
The ARPA also expanded the Earned Income Tax Credit (EITC) for 2021. U.S. workers 19 years and up are eligible this year with or without a child to claim. This translates to more than 66,000 New Hampshire taxpayers. This credit now ranges from $1,502 to $6,728 for 2021, depending on income, filing status and dependents to offset taxes owed, and workers are to be refunded the balance if they owed less than the credit for which they are eligible. In 2018, one in four eligible New Hampshire residents did not claim the EITC, leaving more than $30 million on the table. With the wider expanse of people who qualify for the credit now, there is the danger of even more money going unclaimed by a greater number of taxpayers because they didn’t file.
Knowing which forms you have and which ones you are still expecting will help you determine when you can file.
Prepare an itemized list of business expenses, income and mileage before your appointment if your net self-employment earnings total more than $400.
Donating to a tax-exempt organization will get you a tax deduction of up to $300 if you are single or $600 if you are a married couple filing jointly without having to itemize.
If you are getting money back, consider putting your refund into at least two accounts to save for an emergency or for your future. Your preparer can also assist you in purchasing Series I savings bonds for yourself or as a gift, currently earning 7.12% interest until April 2022.
Paper checks will always take longer.
It always benefits you to know what to do ahead of filing your return not only to save time, but to save your sanity as well. Call The River Center at 603-924-6800, Ext. 30, to find out if you are eligible for our program and to schedule your appointment. Visit us at rivercenternh.org.
Nisa Simila is communications and money matters coordinator for The River Center Family and Community Resource Center, which provides community connections, parenting support, tax assistance and money coaching to strengthen individuals and families in the Eastern Monadnock Region. Funding comes from Monadnock United Way, New Hampshire Charitable Foundation and contributions from individuals, businesses and private foundations. The center is at 9 Vose Farm Road, Suite 115, Peterborough.