Filing Taxes: Resources Available for Michigan Filers with Low- to Moderate-Incomes
For many families in Michigan, finances can be tight, even with two adults working full-time. In fact, the United Way’s ALICE Project found that 38% of households struggle to afford the necessities of housing, child care, food, technology, health care and transportation.
Many rely on an annual tax refund as an important financial boost – using the money to pay down debt, make car or house repairs or purchase supplies for their children. But filing taxes properly can be confusing, and hiring a professional tax preparer can feel out of reach due to the cost.
“It’s a really intimidating topic for a lot of people,” said Angela Gabridge, director of community engagement at Accounting Aid Society.
For southeast Michigan residents, the Accounting Aid Society helps residents with low- to moderate-income earnings file their taxes confidently, with the help of volunteer tax professionals who offer their services free of charge. The organization also helps taxpayers access legal assistance should they need help negotiating with the IRS in the event of an audit or taxes owed that they can’t afford.
In 2020, many faced unemployment and reduced hours, meaning getting taxes right this year can make a big difference for Michigan families. The tax filing deadline was recently extended to May 17. If you’re still working on your taxes, Gabridge said there are common credits available to low- and middle-income earners that are often overlooked. These include:
- The Earned Income Tax Credit: For families with three or more qualifying children, this tax credit could be worth a maximum of $6,660. Single people with no children can also claim the credit – for those making less than $15,820 per year, claiming the EITC could be worth $538. Find out more here. The EITC has been studied and linked to positive health outcomes, especially for infants and moms.
- Michigan’s Home Heating Credit: If you qualify, this credit helps homeowners and renters pay some heating expenses. Learn more here.
- Michigan’s Homestead Property Tax Credit: For qualified renters and homeowners this credit helps pay property taxes, either directly as the homeowner or indirectly as a renter. Find out if you qualify here.
Katie Migliazzo, marketing and communications strategist, Accounting Aid Society, said it’s important to know that even if you’re not required to file federal taxes, it could be beneficial to do so in order to access the state credits you’re eligible for.
The Accounting Aid Society has faced heavy demand for services this year as people file to receive $1,400 Economic Impact Payments, or stimulus payments, made available through the American Rescue Plan Act to provide COVID-19 relief. The act will also expand the Child Tax Credit to provide eligible parents $3,600 for each child under the age of 6, and $3,000 for each child under the age of 18 for 2021.
Gabridge warned against predatory tax preparers who might take liberties with your return to get you a higher refund. She said many tax preparers aren’t certified professionals and while it might be tempting to trade off certainty that your taxes have been done correctly with more immediate funds in your pocket, filing an incorrect return will have consequences.
“The IRS holds a tremendous amount of power and there’s no getting out of it,” Gabridge said.
The best course of action is to work with a licensed professional to prepare your taxes. The Accounting Aid Society is a qualified Volunteer Income Tax Assistance (VITA) program. If you’re not located in southeast Michigan, you can find similar programs with the IRS’ Free Tax Prep locator (income restrictions apply). There are also reputable free filing software programs:
- For people with an income less than $36,000, the IRS offers a Free File Program delivered by TurboTax.
- United Way Worldwide offers MyFreeTaxes and there’s no income limit to use the service.
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