Let the tax prep begin!

Long hiatus for me... there's nothing like feeling guilty about not blogging, as if you forgot to feed a friend's fish while house sitting or something. In any case, I decided to volunteer to do the IRS Volunteer Income Tax Assistance program, henceforth a VITA volunteer. Each year local United Ways put on the Earned Income Tax Credit Coalition, trying to help low income folks get as much back on their tax return as possible. As someone who technically falls into the demographic "living under the poverty line," I thought it would be great to be a helping hand. If anyone is interested in volunteering through their local United Way, you can do other things besides preparing taxes, so be sure to check it out.

When I was a college student I learned early on that I was mainly a visual learner. I have an accordion file folder full of notes I deemed worth keeping post graduation, haven't used them yet but I know they will come in handy. Since I have four IRS volunteer guides that I'm self educating from, I thought perhaps I should stop studying on the couch and do some "note" taking. What better way to reinforce my knowledge than by sharing it, so I will be going through the basic sections on how to prepare taxes. Here's what I've learned so far from the IRS: active listening skills. Ha, ok, but seriously thanks to the guide books I have been able to stumble through explanations one might commonly see on a 1040, or other tax related piece of paper, and make sense out of the nonsensical-English sentences.

Situations when you should file even though you are not required to
I will get into the specifics on how to determine if you should file later. Here are some reason to file:

• You are eligible for a refund of taxes withheld for that year
• You are eligible for the Earned Income Credit- a tax credit for people who do not make high incomes, so as to lessen their tax burden and supplement their wages (more on this later!)
• The additional child tax credit, the health coverage tax credit, the first-time homebuyer credit
• The American opportunity credit- a tax credit in this case for a parent, to help offset the costs of their child's higher education

The types of tax return forms

1040EZ, the simplest of the forms. A one-page return form for people who will having a Single or Married Filing Jointly status and have no dependents. Other specs for using this form are: the person's taxable income must be less than $100,000, you cannot use this form and make adjustments, this form only allows standard deductions, and only works with the EIC and Making Work Pay tax credits. Generally, a taxpayer will use this form if they are someone's dependent.

1040A. The taxpayer can be in any of the filing status brackets (Single, Married Filing Jointly, Married Filing Separately, Head of Household, Qualifying Widow(er)), can have dependents and make adjustments for things such as IRA deductions or student loan interest, and like the EZ still only covers standard deductions. Taxable income must be less than $100,000 again, but the range of tax credits is larger, such as the Child and additional child tax credit, adoption credit, and government retiree credit to name a few.

1040, the biggest and most encompassing form. A taxpayer needs to use the 1040 if s/he has income from self-employment and non-taxable distributions required to be reported as capital gains. If making adjustments, this is the form as it allows for any adjustment, and allows standard and itemized deductions. All available tax credits work when filing with the 1040.