Free Tax Return Preparation for You by Volunteers
Puzzled by the tax law or which credits and deductions to take? Need assistance with your tax return? You may want to visit the USAFA VITA Center in Arnold Hall. The IRS-sponsored VITA Program offers free tax help for military members and their families, active duty or retired.
IRS-trained volunteers can help you with special credits, such as the Earned Income Tax Credit (EITC), Child Tax Credit, and Rebate Recovery Credit for which you may qualify. In addition to free tax return preparation assistance, we also offer free electronic filing of your federal and state returns.
Starting 26 Jan 2009, the USAFA Tax Center will be open Monday through Thursday to provide tax assistance and preparation from 0800-1600. Appointments are required, so please call 333-3905 to schedule your appointment.
Military Personnel and Their Families Get Free Tax Help!
The military has a strong VITA Program. Military members and their families worldwide receive free tax preparation assistance at offices within their installations. VITA sites provide free tax advice, tax preparation, and assistance to military members and their families. Volunteers are trained and equipped to address military specific tax issues, such as combat zone tax benefits, and the effect of the new EITC guidelines.
Last year the USAFA tax center prepared 1,309 returns, saving military members over $125,247 in filing fees, and securing $719,794 in federal and state income tax refunds.
VITA Benefits
• Taxpayers Get Their Refunds Faster: Due to the vagaries of mail service and IRS processing times, military members can expect to wait 45 or more days from the day they mail their returns to the day they see their refund checks. In contrast, electronic filers can expect to have their refund deposited in their bank accounts as early as 9 days after their return is transmitted to the IRS, no matter where they are in the world!
• Direct Deposit of Refunds: This automatic system takes the hassled and delay out of dealing with refund checks, especially for those who are transferring or who are deployed and don’t have easy access to their bank.
• Accuracy: The accuracy rate for e-filed returns is 99.5%! As many as 12 people will handle the average paper return (from preparer to postal staff to IRS staff) and the error rate is as high as 20%. The e-filed return is sent from computer to computer, with fewer humans handling the return, making fewer mistakes. This leads to fewer tax headaches for Airmen!
• No Need for Refund Anticipation Loans (RALs): RALs are short-term loans from commercial tax preparers or other sources, aimed at taxpayers desperate to get their refunds as soon as possible. In the past, these loans often charged exorbitant fees and interest; depending on the amount and length of the loan, interest rates could reach as high as 980% APR! Recent changes in the law and DoD Regulations do not permit RALs for military members if the total interest rate, including fees, exceeds 36%. And while 36% is significantly lower than rates in the past, the availability of VITA make these loans unnecessary, since military members can have their refunds deposited in their bank accounts in one to two weeks at absolutely no cost.
VITA Limitations
Eligibility: The Air Force VITA program is sponsored by and run under the Air Force’s Legal Assistance program. Consequently, only those clients eligible for legal assistance services can be served by the tax center.
• Prioritization: The AF VITA program is primarily intended to serve junior active duty Airmen and their families, as well as USAFA cadets, with other eligible clients assisted as resources, and program limitations permit.
• Scope: The IRS VITA program is not a full-service tax program. While the military part of the IRS VITA program is granted some additional authority to prepare tax returns for military families, the USAFA Tax Center must strictly adhere to IRS guidelines for VITA. For example, we cannot prepare any business returns (no Schedule C’s for example) other than for family childcare providers using a Schedule C-EZ. We cannot prepare a return for multiple rental properties, but can prepare a Schedule E for a former principal residence that is now being used as a rental. In addition, we should not prepare any returns with complex Schedule D’s for significant buying and selling of stocks and bonds. If military members are actively trading securities they have the ability and/or resources to do their own taxes or should seek professional assistance!
Rebate Recovery Credit
The Rebate Recovery Credit is a one-time benefit for people who didn't receive the full economic stimulus payment last year and whose circumstances may have changed, making them eligible now for some or all of the unpaid portion. Generally, a credit adds to the amount of your tax refund or lowers the amount of taxes owed. Therefore, the amount you receive for the recovery rebate credit will be included as part of your refund, as shown on your tax return.
People who fall into the categories below may be eligible for the recovery rebate credit this year:
• Individuals who did not receive an economic stimulus payment.
• Those who received less than the maximum economic stimulus payment in 2008 because their qualifying or gross income was either too high or too low.
• Families who gained an additional qualifying child in 2008.
• Individuals who could be claimed as a dependent on someone else’s return in 2007, but who cannot be claimed as a dependent on another return in 2008.
The recovery rebate credit is claimed on the Form 1040, 1040A, or 1040EZ. Unlike the economic stimulus payment, the recovery rebate credit will be included in your tax refund for 2008 and will not be issued as a separate payment. You need to know the amount of your 2008 economic stimulus payment to determine if you are eligible for the Recovery Rebate Credit, so please bring that information with you to your appointment at the tax center.
Documentation Cadets should bring to their appointment at the VITA Center:
• Proof of eligibility/identification: Military ID card
• Social Security Card.
• Wage and earning statement (s) Form W-2. W-2G, 1099-R, 1099-M, from all employers.
• Interest, dividend, and brokerage account statements from banks and financial institutions (Forms 1099), and the cost basis for any stocks or mutual funds sold. This includes Form 1099 statements mailed to parents for accounts under the Cadet’s social security number.
• A copy of last year’s Federal and State returns if available.
• Bank Routing Numbers and Account Numbers for Direct Deposit.
Filing Late
There is still time to file for those who have not yet filed an income tax return for 2005, 2006 and/or 2007 to claim a refund. If a taxpayer is due a refund of withholding or estimated taxes paid, it must be claimed within 3 years of the return due date (including extensions) or the taxpayer loses the right to that refund. The same rule applies to a right to claim a tax credit such as the Earned Income Credit (EIC). Penalties and interest do no apply in years in which a taxpayer is entitled to a refund. The USAFA Tax Center can assist members in completing tax returns and claiming refunds for 2005, 2006 and 2007 but these returns cannot be electronically filed and must be mailed to the IRS.
Questions regarding military income tax benefits and requirements can be addressed to the USAFA Tax Center at 719-333-3905 or a JAG legal assistance attorney at 719-333-3940. The IRS web page at Internal Revenue Service also has a wealth of information for military taxpayers including a very useful Q&A section that may address your particular issue. Information contained herein is valid for the 2008 tax year. This article was prepared with information from the IRS web site and Office of the Navy Judge Advocate General, Legal Assistance Division (Code 16).