2008 flooding has local tax benefit
Disaster relief credit may boost refund more than earned income, child tax credits
March 18, 2009
The following free tax help sessions are offered to elderly and low-income area residents, in room 2B at the Monroe County Public Library, 303 E. Kirkwood Ave.:
Thanks to her keen eye, Ivy Tech student Sabrina Carter’s federal tax refund this year jumped from $1,400 to $6,179.
The accounting major saw an asterisk at the bottom of her tax form instruction booklet, she said Tuesday. That asterisk led her to information about the Midwestern disaster relief credit.
“It was there the whole time. It’s just my instructors weren’t aware of it,” and the IRS hadn’t pointed it out, Carter said.
Due to severe flooding in Indiana in summer 2008, many counties were declared disaster areas, including Brown, Greene, Lawrence, Monroe, Morgan and Owen.
Qualifying individuals who lived in these counties during the flooding can elect to use their 2007 earned income to figure their earned income credit and child tax credit for 2008 — as long as they earned less in 2008 than in the previous year.
“They can choose whichever figure gives them the higher credit,” said Ivy Tech income tax and accounting professor Roy Elkes.
His students, Carter among them, helped people who qualified get as much as $2,000 or $3,000 more back from the feds this year, thanks to the disaster relief credit.
That credit, Elkes said, is an example of “how localized federal tax law has become.”
People wondering if they qualify should first see if they lived in a county designated a disaster area. “Then they want to go back to their 2007 tax return and see if they received the earned income credit,” Elkes said. And, finally, people should see if their 2008 earned income is less than their 2007 earned income.
Certain education tax credits also can be doubled thanks to the disaster relief credit, he said. The fine print can be found in IRS Publication 4492-B.
Ivy Tech students helped people figure this out through VITA, the Volunteer Income Tax Assistance program. This tax season, program participants completed 311 tax returns, generating more than $495,000 in federal refunds, according to an Ivy Tech news release.
The program is administered by the IRS, and students must complete required tax training to participate.
“We call it a service learning course, because the students are implementing the concepts we teach in the course to real life,” Elkes said. “Once they get into it, they put in way more hours than what they’re required to do. They find that they have so much fun.”
A highlight for Carter was helping a woman whose return included a first-time homebuyer credit. The woman is getting a total of $14,500 back from the federal government, Carter said.
“That was pretty cool. She was very excited,” Carter said. “I would be, too.”
Low-income and elderly area residents can still get free help filing their state and federal taxes at area libraries.
Coordinated by the local AARP Tax Aide Program, volunteers will also assist residents who are eligible to receive tax refunds from the Earned Income Tax Credit.
Help is offered on a first-come, first-served basis at the Monroe County Public Library’s main branch. Appointments are not available, and in-person sign-in begins a half hour before each session.
Library staff member Dory Lynch said sessions fill up quickly. People should bring with them a valid picture ID, a Social Security card, birth dates of spouse and/or dependents and all tax forms, such as W2s, 1099s, and so on. If a married couple is filing jointly, both people must be present to sign forms, she said.
Free help also will be available at the library’s Ellettsville branch, 600 W. Temperance St., thanks to Area 10 Agency on Aging volunteers. Help is by appointment only, Tuesdays and Thursdays from 10 a.m. to 1 p.m. Call 876-3383 to make an appointment. Special attention is paid to people 60 and older. A few Saturday help sessions will be offered. Call for more information.
Volunteers fluent in Spanish will host free help sessions through El Centro Comunal Latino, in the main library branch. Call 355-7513 or 349-3860 for more information.
Low-income residents are generally considered to be those who make $35,000 or less per family.
What Carter did was read the small print — an asterisk, actually — on her federal tax information booklet as she was preparing her 2008 tax return.
The asterisk led her to the fact that Indiana was among several states whose counties were declared federal disaster areas last year, making her and many, many others eligible to collect a bigger refund. For Carter, it was about $4,800 more than she anticipated.
Last summer’s severe flooding led to the disaster declaration that included Monroe and surrounding counties, and for some taxpayers who live in those counties, last summer’s deluge is turning into cash.
It’s kind of complicated — after all, it’s federal tax law we’re talking about here, folks — and not available to all taxpayers. But if you are eligible for earned income credit, child tax credits or education credits, you definitely should look closely at your tax booklet. And as H-T reporter Nicole Brooks wrote in Wednesday’s story, help is available if all that gobbledygook doesn’t make sense to you.
In fact, Carter herself has been helping taxpayers sort out their returns as a member of the Volunteer Income Tax Assistance program, a cooperative venture of the Internal Revenue Service and other agencies and institutions, including Ivy Tech, that offers assistance to seniors and those with low incomes. The Ivy Tech volunteers were accounting students who gained hands-on experience in the real world while providing assistance — and the occasional big cash bonus — to local taxpayers. That program, actually part of an accounting class requirement at Ivy Tech, has wrapped up its campus sessions for the season. But VITA volunteers are still available to help at the Monroe County Public Library through April 14, the day before filing deadline. Area 10 Agency on Aging also offers tax help at the Ellettsville library. Check Wednesday’s Business page for details and the library’s schedule, or find it online at HeraldTimesOnline.com.
They are valuable services. Take advantage if you need help.