Early returns prepared at the Volunteer Income Tax Assistance (VITA) site where I volunteer are resulting in similar refunds or taxes due from previous years. VITA serves individuals with incomes at or below $55,000.

Dependents listed on returns are the biggest factor resulting in similar results. The child tax credit increased to $2000, the refundable portion of the child tax credit has increased to $1,400, and there is a non-refundable credit of $500 for dependent individuals who are 17 or older on December 31st of the tax year.

At the tax site, parents often state they won’t claim a dependent, even when they are eligible. If someone can be claimed as a dependent on your return it should be done; the IRS doesn’t allow a choice. Income deductions don’t increase and the $500 credit may be lost.

Lower withholding hasn’t been a problem with clients we’ve seen, but it has resulted in slightly higher incomes on the state returns, due to reduced deduction on Line 31. While most individuals won’t exceed the federal standard deduction, it makes sense to gather and record allowable deductions so they will carry over in software to the state return. Iowa has a standard deduction of $2,030 for single and $5,000 for couples, so it’s much easier to itemize on the state return.

If you aren’t setting up your refund to be deposited directly into your checking or savings account, this would be the year to start. As one client stated, ” The Federal government could shut down again. It’s hard to tell when I would get my refund, if I have a check mailed. Here is my bank information!”


Joyce Lash

Joyce Lash

Joyce Lash is a Human Sciences Specialist in Family Finance who wants to keep you ahead of the curve on financial information.

More Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

    

Subscribe to “MoneyTip$”

Enter your email address:

Delivered by FeedBurner

Archives

Categories