Tax Tips

Most people file a tax return because they have to, but even if you don’t, there are times when you should. You may be eligible for a tax refund that you don’t know about. Here are 6 tips to help you find out if you should file a tax return:

1. General Filing Rules. In most cases, the amount of your income, your filing status and your age determine if you must file a tax return. Special rules apply if you’re self-employed or if you’re a dependent of another person. There are also other cases when you must file. Go to IRS.gov/filing to find out if you need to file.
    
2. Premium Tax Credit. If you enrolled in health insurance through Vermont Health Connect, you may be eligible for the premium tax credit. You will need to file a return to claim the credit. If you chose to have advance payments of the premium tax credit sent directly to your insurer you must file a federal tax return. You will reconcile any advance payments with the allowable premium tax credit. You should receive Form 1095-A, Health Insurance Marketplace Statement, by early February. The form will have information that will help you file your tax return.
    
3. Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year? Was it applied to pay this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.
    
4. Earned Income Tax Credit. Did you work last year? You could receive EITC as a tax refund, if you qualify. You do not have to have a qualifying child. You may be eligible for more than $6,000. Use the EITC Assistant tool on IRS.gov to find out if you qualify. If you do, file a tax return to claim it.
    
5. Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit.
    
6. American Opportunity Tax Credit. The AOTC is available for four years of post secondary education and can be up to $2,500 per eligible student. You, your spouse or your dependent must have been a student enrolled at least half time for at least one academic period. Even if you don’t owe any taxes, you still may qualify. You must complete Form 8863, Education Credits, and file it with your return to claim the credit. Use the Interactive Tax Assistant tool on IRS.gov to see if you can claim the credit. Learn more by visiting the IRS’ Education Credits Web page.

The instructions for Form 1040 lists income tax filing requirements. You can also use the Interactive Tax Assistant tool on IRS.gov. Look for “Do I need to file a return?” under general topics to see if you need to file. The tool is available 24/7 to answer many tax questions. Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

More IRS Resources:

• The Premium Tax Credit
• Form 8962, Premium Tax Credit (PTC)
• Publication 972, Child Tax Credit

IRS YouTube Videos:

• Education Tax Credits - English
• ASL: Education Tax Credits (Captions & Audio)

Have you seen the ads for “instant money,” “rapid refunds” or “electronic refund advances”? These tax services often take a large part of your tax refund. Don't be fooled by flashy ads!

What do these tax service companies really offer? They give you a very expensive loan. The interest rate on the loan can cost you from 173% to more than 200% interest per year!

There are other problems with these loans. What happens if the tax preparer makes a mistake? What happens if the IRS withholds your refund? You still have to repay interest on the loan you got from the tax service company.

You'll get more of your tax money if you wait for the IRS to give you your refund check in the normal time. Usually, it only takes 2 to 4 weeks to get your refund. E-filing (filing online) is even faster – if you e-file, you will usually get your refund in 7 to 10 days.

Why pay a company hundreds of dollars for a “rapid refund”? The “rapid refund" will only get to you a few days earlier – and your refund will be a lot less money! Why not save those hundreds of dollars for yourself and your family?

Learn more about:

• Tracking your tax refund
• E-filing for free or getting free help to file your taxes

Qualified volunteers offer free tax filing help to low- and moderate-income Vermonters.

Learn more about free tax filing help.

Explore your options with IRS Free File and Vermont Free File. Learn more about these free file programs.

These tax credits can be very helpful to low-income taxpayers:

• Earned Income Credit (EIC)
• Child Tax Credit
• Child and Dependent Care Tax Credit
• Educational Tax Credits
• Renter Credit
• Property Tax Credit

Learn more on our Tax Credits You Should Know About page.

Did you receive an e-mail or phone call from the IRS asking for your personal information? Watch out! Those may be scams.

The IRS usually sends official correspondence to you by US Mail.

Learn more about how to spot a scam and how to protect yourself by watching this video from the IRS.

You should file your tax return on time, even if you can't pay the taxes you owe. The penalty for filing late is more than the penalty for paying late. Read 10 facts you should know about tax penalties to find out about how much it can cost you to file or pay late.

IRS Tax Information for Individuals
IRS web page with helpful tax information

Free Tax Help Available
Information about free tax help programs and what to bring with you to a help session

Choosing a Tax Return Preparer
IRS Tips for to help you find a tax preparer you can trust and avoid the ones you can’t.