Feb. 4, 2002

COLLEGE STATION – The holidays are over; the seasonal celebrations have died down ... and now it's time to think about filling out income tax forms again.

Many Americans dread this annual chore, not necessarily because they owe taxes, but because the tax forms are so difficult to decipher. And that's why so many hire some professional to fill out the forms for them.

"IRS (Internal Revenue Service) data indicate 60 percent of EIC (Earned Income Credit) recipients are paying someone to prepare their tax returns – paying at least $666 million for services in 1999," said Dr. Lynn B. White, Texas Cooperative Extension family economics specialist in College Station.

EIC recipients are those taxpayers who earn "up to $32,000 raising children age 18 and under, and workers without children earning $10,500 or less," such as people who have just gotten out of school and started to work or who are working part-time, she explained.

Unfortunately, some taxpayers may find these services too expensive for their budgets. And that's where Volunteer Income Tax Assistance (VITA) comes in. These volunteer tax preparers "have completed instruction and work with regional IRS offices to provide free assistance (especially to) older adults, low income or other clients who have trouble completing basic tax returns unassisted," White said.

These volunteers' services, often located in senior centers, community centers, libraries or other public buildings, can be found throughout Texas. For information about VITA volunteers in specific locations, call (800) 829-1040 (the wait may be long) or contact a county Extension agent.

When visiting an income tax preparer – whether VITA or not – White said taxpayers should make sure they have the proper forms with them. These include:

- A copy of their 2000 tax return, if possible;

- Social Security numbers for the taxpayer and all dependents (including any children born before Dec. 31, 2001) – bringing Social Security cards themselves is helpful;

- W-2 forms from all jobs worked in 2001; if W-2 forms were not received, workers should bring final pay stubs, if available;

- 1099-G forms if they received unemployment insurance benefits in 2001;

- 1099-INT if they received bank interest in 2001;

- Any statements from mortgage companies documenting interest paid in 2001;

- Letters from the IRS detailing why the worker did or did not receive a tax rebate during the summer of 2001, if available.

Also, some taxpayers need to know about the Child Tax Credit (CTC), which "has been increased to $600 for the 2001 tax year for each dependent child under age 17," White added.

"In contrast to a deduction that reduces one's taxable income, a tax credit is either subtracted from the amount of tax a person owes or is added to his or her refund, if he or she has overpaid taxes," she said.

"For many low-income working families with children, using both tax credits (EIC and CTC) increases their tax refund."

And to increase paychecks a little during the year – and have a little lower refund in the spring – White said some qualifying tax payers might want to file a W-5 form.

"Rather than waiting until they file their taxes for 2002 next year, people who qualify for EIC can complete a W-5 form and give it to their employer to allow their withholding taxes from each paycheck to be lowered," she said. "Up to one-half of their estimated EIC can be advanced in their paychecks, making it possible for employers to send them home with more money each payday without raising their wages. So it's a win-win for the employer and employees."

While this time of year is rarely anyone's favorite, with a little time and planning, tax time doesn't have to be a dreaded annual chore, White said.

Especially if a refund is on the way.