Three tips for filing taxes & getting free support

If you were employed in 2020, you’ve probably received W-2 forms from your employer and likely started to gather the necessary documents to file your tax returns. The pandemic has caused changes in tax policy and the ways you can receive free tax assistance. Here are tips on preparing your tax returns, including recommendations on filing your taxes and getting free tax preparation assistance in the COVID-19 era.

Tip #1 - File Early, But Wait Until February 12

• Filing early helps reduce the chance of someone filing a fraudulent return in your name.
• You will receive your refund faster.
• You will eliminate the stress of filing right before the deadline.
• Tax filing season normally begins at the end of January. However, the IRS moved that date back to February 12 so it can incorporate changes from the COVID-19 relief bill approved at the end of 2020.

Tip #2 - File Even If You Don't Have To; Take Advantage of Tax Deductions

• Didn't receive your stimulus money or the full amount you were promised? You will need to file 2020 Form 1040 or 1040-SR to receive the Recovery Rebate Credit.
• Take advantage of the Earned Income Tax Credit (EITC) and other tax credits. If you have any verifiable earned income but not enough to require filing a return, you could be eligible for a tax refund by applying for these credits.
• See if you qualify for a property tax refund for renters and homeowners. You do not have to submit an income tax return to file for this refund. Send your property tax refund form to the MN Department of Revenue.
• As part of the COVID-19 relief package in 2020, you can claim a charitable deduction on your federal taxes even if you don't itemize. Last year’s CARES Act allows for a deduction of up to $300 for cash contributions made to qualifying organizations in 2020.
• You may also subtract some of your charitable contributions from your Minnesota taxable income. You can qualify for this deduction if you do not itemize deductions on your Minnesota income tax return and you donated more than $500 to qualifying organizations in 2020.

Tip #3 – Take Advantage of Tax Preparation Assistance

• In Minnesota, it costs an average of $271 to file taxes. At a time when COVID-19 continues to create economic uncertainty, Minnesotans and their families can turn to free tax preparation sites. Keep in mind that some of these sites have income requirements in order to receive their services. Regardless of where you live, keep reading for how to find free tax prep sites in your area.
• Whether you qualify for free tax assistance or not, talk your tax preparer about any credits and deductions you might be eligible for.

Resources for Free Tax Assistance

• AARP has free Tax-Aide sites across Minnesota. These sites do not have strict guidelines on income or age, though they do focus on taxpayers who are older than 50 or have low to moderate incomes. The Tax-Aide sites will not work on returns they determine to be “complex.” All AARP tax preparers are volunteers who must complete required training and receive IRS certification each year. Tax help is provided in safe environments using a variety of methods, based on factors such as where you are located, COVID-19 spread and volunteer availability.  To find a tax preparation site near you, go to the AARP website after February 1, or call 888.227.7669. Most Tax-Aide sites require appointments, and interpreter assistance is limited.
• Tax Counseling for the Elderly (TCE) is a federal grant program providing tax preparation assistance by IRS-certified volunteers, particularly to taxpayers 60 years of age and older. (Most TCE sites are operated by AARP’s Tax-Aide service.) For more information, call 888.227.7669 toll-free or check online.

• Volunteer Income Tax Assistance (VITA) is another federally-sponsored grant program. IRS-certified VITA volunteers provide tax preparation services to people who generally have income of $56,000 or less, as well as those with disabilities or limited English language skills. Call 800.906.9887 to find a nearby VITA site. Online assistance is also available.

• Minnesota Department of Revenue has a list of tax preparation sites throughout Minnesota. Visit the department's website after Jan. 31 to find a preparer, or call 651.296.3781 or 800.652.9094. The department also has links to free tax preparation software from the Internal Revenue Service for Minnesotans who meet income guidelines.

• Prepare + Prosper has a team of 500+ IRS-certified volunteers who can provide free support to you on taxes and finances. They prepare federal and Minnesota returns, including property tax refunds for renters and homeowners. Because of COVID-19, all assistance is done by appointment only; walk-in appointments are not available. To receive assistance, individual taxpayers must earn $35,000 per year or less; families, $55,000/year or less. The Prepare + Prosper website has more information on other tax assistance services and eligibility criteria.

Need Additional Assistance?

If you have financial goals you want to reach but are overwhelmed or don’t know how to start, LSS Financial Counseling can help. Our experienced, non-judgmental counselors will work with you to create a realistic budget, plans to pay off debt (including student loans), and strategies to improve your credit score. Call 888.577.2227 for your free, confidential appointment, or get all your support online.

If you need longer-term support with your finances, Prepare + Prosper’s Money Mentors program can help. You will work one-on-one with a volunteer financial coach over the course of six months to develop an individualized action plan to help you reach your financial goals. To maintain social distancing and the health of its volunteers and participants, Prepare + Prosper offers this program virtually using phone and/or video chat. Learn more and apply here.

Co-author Mary Ellen Kaluza is a Certified Financial Counselor for LSS Financial Counseling.

Co-author Shawna Thompson is a Program Director for LSS Financial Counseling.