By Barb Wollan, Laura Sternweis
An income tax refund provides an important annual financial boost for many Iowa families. Claiming that tax refund, however, is sometimes more expensive than it needs to be, according to Barb Wollan, a human sciences specialist with Iowa State University Extension and Outreach.
“I talk to people all the time whose tax refunds are equal to one to three months of income. They rely on their tax refund to accomplish the financial goals they’ve set for the year,” said Wollan, who specializes in family finance.
“People sometimes resign themselves to spending $100-$300 in tax preparation fees, deciding it’s ‘worth it’ in order to get their tax refund, which may be a few thousand dollars,” Wollan said. “However, if they didn’t pay for tax preparation, they would certainly find a good use for the extra few hundred dollars.”
The good news is that there are at least two ways for low and moderate-income households to file their taxes for free, Wollan said.
Volunteer Income Tax Assistance
Volunteer Income Tax Assistance is an IRS-sponsored program in which certified volunteer tax preparers work with taxpayers to file their income tax returns for free. VITA sites are intended for low and moderate income taxpayers, with some flexibility in income guidelines depending on an individual’s situation.
Volunteers are equipped to prepare returns with a range of tax issues, including the most common types of income and tax credits. There are, however, some tax issues that volunteers are not allowed to address, including farm and rental income and some types of small business returns.
In many Iowa counties, ISU Extension and Outreach is a partner in VITA, often hosting VITA sites and assisting with site management. ISU Extension specialists also provide training and technical support to some Iowa sites.
“VITA volunteers work in pairs or teams with careful quality monitoring processes to ensure accurate tax returns,” said Wollan. “These caring and capable individuals work to help taxpayers understand their tax returns, and to inform them about opportunities to claim deductions or credits in the future.”
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