Why I coordinate the IRS VITA program

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This is my sixth year to coordinate the Internal Revenue Service Volunteer Income Tax Assistance Program (VITA) in my four-county service area of Cameron, Elk, McKean and Potter counties. In addition to training and monitoring volunteers, I also spend February, March and part of April interacting with clients on a one-to-one basis completing their federal and state income tax returns as well as rent and property tax rebate forms for those who are eligible. I use this opportunity to not only help them meet their legal obligations, but also as a teachable moment to help increase their financial literacy and skills.

Just yesterday I shared with a single mom of four that next spring, when she is filing the FAFSA (Free Application for Federal Student Aid) form for her first college-bound student, she could use information from her 2010 tax returns and later, once her 2011 return was completed she could go back and amend the information she inputted. There are various deadlines to filing the FAFSA, but folks have until April 15 to file their federal return and can also file an extension, making the return due in October. People who don't understand the system panic and may seek the services of a paid preparer in order to meet the FAFSA deadline. For many of the clients I see, tax preparation bills can exceed $200, money that could be better used to meet family obligations.

So the primary reason I got involved with VITA is that I don't believe you should have to pay someone else to help you meet your legal obligation of filing an annual income tax return. The tax system has become so complex and confusing, even calls to the IRS for assistance have been documented as resulting in receiving erroneous information. Additionally, beginning for the 2010 tax season, the IRS as well as Pennsylvania have foregone mailing income tax packages to taxpayers - forcing them to either use computers or seek the services of a paid preparer to get their forms. Many of the folks I interact with either don't have computers or lack the requisite skills to use them to prepare their returns. Many have disabilities or limited education and lack the sophistication to follow-through on their legal obligation.

Yesterday I had a retiree come for her VITA appointment, Her TOTAL 2010 income was $10,000 or so in social security retirement benefits, under $3,000 in pension benefits plus she had won $5,000 from the Pennsylvania Lottery (don't even get me started on that topic!) We ask that VITA clients bring last year's tax returns which sometimes provides additional information required for proper preparation of this year's return. She had seen a paid preparer last year who charged her $75 for their services. In reviewing that return I discovered her financial situation was the same as this year, except for no lottery winnings. Because of the sources and amounts of her income SHE WAS NOT REQUIRED TO FILE EITHER A FEDERAL OR STATE INCOME TAX RETURN. SHE PAID $75 UNNECESSARILY! Because she is under 65, her standard deduction is $5,700 and her personal exemption is $3,650 - added together, her first $9,350 is TAX-FREE - in this case her income was so low that her social security benefits didn't factor into her taxable income. Because her winnings were from the Pennsylvania Lottery, that is not taxable and Pennsylvania doesn't tax pensions or social security.

I didn't have the heart to tell her about the futility of her $75 spent on returns that weren't necessary - plus I also kept to myself that the paid preparer had reported her pension on her last year's state return. $75 may not sound like much to some people, but this was money she could ill afford to pay. What is done is done. I did explain to her the filing requirements and informed her that unless she returned to work, or the tax laws change, she would not have a filing requirement for either the federal or state.

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