HELPING STRUGGLING FAMILIES RECOVER WITH FREE TAX PREP
This year, Tax Day will be one of the most important of the century so far. That’s because the COVID-19 pandemic has taken a financial toll on so many families.
- 1 in 3 adults overall, and 1 in 2 people who are Black or Latino, report that it has been somewhat or very difficult to cover household expenses.
- About 30% of Americans have reported lower income since the start of the pandemic.
- About 35% of Americans have less emergency savings than before the pandemic began.
In 2019, free tax-prep programs run by United Ways across the U.S. brought back $1.85 billion to local communities, largely thanks to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).
TWO WAYS TO FILE YOUR TAXES FOR FREE
VOLUNTEER INCOME TAX ASSISTANCE (VITA)
The VITA program provides individuals and families who earn less than $57,000 annually with free, reliable assistance in filing federal tax returns. In 2019, thousands of VITA volunteers prepared hundreds of thousands of tax returns nationwide resulting in more than $1.85 billion returning to local communities. These dollars are spent to cover child care expenses, pay bills, as well as to save for the future. Call 2-1-1 to make an appointment and find a free tax preparation site near you (dial 2-1-1 or 1-888-696-9211).
MyFreeTaxes is an easy way for people to file their taxes for free. United Way offers this free online tax preparation software to every household with a simple return. You can file your taxes completely online from the comfort of your
home. Visit myfreetaxes.com to get started.
ADDITIONAL INFORMATION TO HELP YOU NAVIGATE TAX SEASON
Earned Income Tax Credit (EITC) and Child Tax Credit (CTC)
The Earned Income Tax Credit or EITC is the federal government’s largest benefit for workers. Last year 22 million people received a tax credit through EITC. EITC tax credits help low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund.
Earned Income and adjusted gross income (AGI) must each be less than:
- $50,594 ($56,844 if Married Filing Jointly) with three or more qualifying children
- $47,440 ($53,330 if Married Filing Jointly) with two qualifying children
- $41,756 ($47,646 if Married Filing Jointly) with one qualifying child
- $15,820 ($21,710 if Married Filing Jointly) with no qualifying child
Tax Year 2020 maximum amount of credit you can claim:
- $6,660 with three or more qualifying children
- $5,920 with two qualifying children
- $3,584 with one qualifying child
- $538 with no qualifying child
CARES Act Charitable Deduction
On March 27, 2020, Congress enacted The CARES Act, which created a $300 charitable deduction for the 120 million Americans who do not itemize their taxes. United Way of Buffalo & Erie County donors can deduct up to $300 in charitable contributions made before December 31, 2020.
2020 Stimulus Payments
If you received an Economic Impact Payment in 2020 (also known as a stimulus payment) as part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), it will affect how much you owe in taxes for the 2020 tax year. These stimulus payments were advance payments of refundable tax credits from individual 2020 tax returns.
Payment not received or less than expected? Claim it on 2020 tax return.
Because of the speed at which the IRS issued this second round of payments, some payments may have been sent to an account that may be closed or no longer active. By law, the financial institution must return the payment to the IRS, they cannot hold and issue the payment to an individual when the account is no longer active. While the IRS is exploring options to correct these payments, if you have not received your full payment by the time you file your 2020 tax return, you may claim the Recovery Rebate Credit on your tax return. The credit is figured like the Economic Impact Payment, except that the credit eligibility and the credit amount are based on the 2020 tax year information, including income.
For people who received a partial Economic Impact Payment, they can take the Recovery Rebate Credit for any remaining amount they’re eligible for by completing line 30 of the 2020 Form 1040 or 1040-SR.