|A tax refund is often the biggest influx of money low-income taxpayers see all year. Between reaping the advantages of a lower tax bracket and qualifying for tax credits like the Earned Income Tax Credit (EITC), low-wage earners receive tens of billions of refund dollars each year.
The IRS reported that it paid out $62.6 billion in EITC money for the most recent completed tax year, 2012 — and tax preparers are looking to get a cut of that money. But there are many free services available to low-income taxpayers to make sure their full tax refund ends up where it belongs — in their bank account.
Low-Income Taxpayers Charged More High Tax Preparation Fees
“With almost no regulation in the tax preparation industry and a tax code that is forbiddingly complex, the billions flowing into low-income households this time of year, primarily in the form of the earned-income tax credit, present a ripe target for the unscrupulous,” according to Campbell Robertson of The New York Times.
According to a report by the IRS, low-income taxpayers are more likely to use the help of professional tax preparers to file. The New York Times also reported that low-income taxpayers are often unaware that the fee they are charged is too high, and might not know what a fair price for professional tax help is.
Other low-income earners fail to file at all, correctly assuming they won’t owe taxes — but then miss out on tax benefits like EITC, for which they might qualify.
Free Tax Help for Low-Income Taxpayers
With a range of free services and help aimed at assisting low-income tax filers, those who fall within this group have no need to pay exorbitant fees or miss out on refund money by failing to file.
The IRS itself offers free help to tax filers, including free tax return preparation through its Volunteer Income Tax Assistance program, which “offers free tax help to people who generally make $52,000 or less, persons with disabilities, the elderly and limited English speaking taxpayers who need assistance in preparing their own tax returns,” according to the IRS website.
GOBankingRates recently published a guide to free tax preparation services — visit the link to see the full roundup of free tax preparation help for filing your 2013 return.