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Training Sponsored By: Legal Aid Society of Minneapolis, University of Minnesota Extension, AccountAbility Minnesota, Minnesota Community Action Partnership, Minnesota Department of Human Services-Office of Economic Opportunity, and Minnesota Saves Network

The Tax Credit Primer is an education program that offers a non-technical overview of tax topics important to taxpayers with low to middle incomes. This year, the program will focus on providing a brief overview of the tax system and the available credits, places where taxpayers can go for help, and strategies for promoting the tax credits available to families with low incomes.

The Tax Credits offered by the Federal and State Governments often put more money into the hands of families than the public benefits they may receive and in some cases can equal more than 40% of their earned income.

This handbook is not intended to be a comprehensive tax guide or legal reference. Many of the more complicated nuances of the tax laws will not be discussed. If your clients have complicated tax questions it is best to suggestion they contact a tax professional for assistance. The second half of this booklet will provide information about resources for taxpayers.

Each year people who have "taxable" income must file a tax return. In Minnesota, both a Federal and a State return must be filed. The return is a way of reporting income and claiming tax credits. Income has a very broad definition. You must pay taxes on some income (taxable), and on some income, you are not required to pay taxes (non-taxable). The main categories of taxable and non-taxable income are:

If your filing status is:	AND at the end of 2009 you were:	THEN you MUST file a return if your gross income was at least:
Single	under 65 65 or Older	$ 9,350 10,750
Married filing jointly	under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)	$18,700 19,800 20,900
Married filing separately	any age	$ 3,650
Head of Household	under 65 65 or older	$12,000 13,400
Qualifying widow(er) with dependent child	under 65 65 or older	$15,050 16,150

** NOTE: If you are SELF-EMPLOYED you must file if your income is at least $400.

Because of the economic downtown, many people are facing mounting debt and home foreclosures. Sometimes a company may decide to stop trying to collect a debt owed to it. If a company does this they may "cancel" the debt and issue the debtor a form called "Cancelation of Debt" (form number 1099-C). The IRS will count the amount of the debt cancelled as taxable income. This comes as quite a surprise to many people. If you know of someone who has received a form 1099-C, you may want to suggest that they speak with a tax professional because there are some circumstances when the income shown on the form will not be taxable. They may qualify for free service from a Volunteer Income Tax Assistance site or from Legal Aid (see section on where to get help in this handbook).

Under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers generally can exclude income from the discharge of debt on their principal residence or mortgage restructuring. This exception does not apply to second homes or vacation homes. In some cases the taxpayer may be able to file an amended return for previous tax years.

** NOTE: Foreclosures and mortgage restructuring are very complex tax issues and the taxpayer should seek out a tax professional for advice.

Many taxpayers do not understand the consequences of being paid as an "independent contractor" (receiving a 1099-MISC at the end of the year). When a taxpayer is paid as a contractor, there are no taxes withheld from the taxpayer's paycheck. At the end of the year, the taxpayer can end up owing a substantial amount of money in income tax and self-employment tax. Taxpayers that are most likely to receive a 1099-MISC at the end of the year are home daycare providers who are paid by the county, people who work for cleaning companies, painters, and others who are hired on a "per job" basis.

Under the American Recovery and Reinvestment Act, the first $2,400 of unemployment compensation is excluded from taxable income. If the taxpayer is filing a joint return and their spouse also received unemployment compensation, the spouse may also exclude the first $2,400 of their unemployment compensation from taxable income. Any amount exceeding $2,400 is TAXABLE must be included in the total amount of taxable income. Taxes are not automatically withheld from unemployment compensation but taxpayers who are worried about saving enough money to pay the taxes can request that taxes be withheld.

SOCIAL SECURITY NUMBER AND INDIVIDUAL TAXPAYER IDENTIFICATION NUMBERS (ITIN)

When filing a tax return, a taxpayer must provide an identification number on their tax return. A taxpayer will either use their social security number or an ITIN on their tax return.

Most U.S. Citizens and permanent residents have Social Security numbers. The number is used to track worker's earnings over their working life. It can also serve as proof that a person has the legal right to work in the United States.

An ITIN is a 9-digit number that a person who does not have a social security number can use to file a tax return. In general a person needs a social security number to be employed in the United States. However, there are many people working in the United States who do not have social security numbers. Workers without social security numbers are often referred to as "undocumented" workers.

Even though a person may not be legally allowed to work in the United States, if they do work, they must comply with the tax laws and file a return. To file a return, undocumented workers will need to ask the IRS to assign them an ITIN.

The IRS is currently prohibited by disclosure laws from disclosing information about tax filers to United States Citizenship and Immigration Services (USCIS). However, both agencies are working toward removing this restriction.

To obtain an ITIN, taxpayers should go to an IRS walk-in office with a completed W-7 and a completed tax return. The forms can be found at the IRS website. They must also have with them documents proving identity.

Can someone with an ITIN get all the same credits as someone with a Social Security Number?

Filers who are using an ITIN cannot claim the Earned Income Tax Credit (EITC) or Advanced Earned Income Tax Credit. Additionally, if a taxpayer who has a social security number is married to and living with a spouse who does not have a social security number they may not claim the EITC.

Filers who use ITINs can claim the child tax credit and adoption credit if they meet certain requirements. They can also claim exemptions for themselves and their spouse and children (as long as everyone has an ITIN).

A deduction reduces the amount of income a taxpayer will pay tax on. Less taxable income means less tax owed.

A credit reduces, dollar for dollar, the amount of tax a taxpayer must pay. For example, if you have a tax credit of $1000.00 and your return shows you will have to pay $2000.00 in tax, the credit will reduce that amount to $1000.00. Credits can be "refundable" or "non-refundable".

A non-refundable credit can only reduce the tax you must pay to zero. If the credit is more than what you owe in taxes the remaining credit is lost. For example, the Federal Child and Dependant Care Credit is non-refundable. If your tax is $100 and your Child and Dependant Care Credit is $400, the credit would reduce the tax you owe to $0 and the remaining $300 would be lost.

A refundable credit can reduce your tax below zero and result in a refund. For example, the Earned Income Tax Credit (EITC) is a refundable credit. If your tax is $100 and your Earned Income Tax Credit is $400, your tax will be reduced to $0 and the $300 left over will be paid to you.

Many taxpayers with low incomes will not have little or no taxable income after they take the allowed deductions and exemptions. Thus, the tax they owe may be $0 and they will get the entire amount of the refundable credits back in a tax refund. This can result in thousands of dollars for a family who is struggling financially.

What if a taxpayer did not know about the credits and did not file returns to claim the credits in previous years?

The good news for a person in this situation is that most federal credits can be claimed for the 3 previous tax years by filing the returns. If a taxpayer is a wage earner or receives a 1099-MISC, they can ask the IRS to send them the information they will need to file the previous years' returns. Additionally, they may qualify for free tax preparation (see "Where to get help" section for details). If they do not qualify for free assistance, all the forms they need to file past tax returns can be found on the IRS website, www.irs.gov. In the search box of the main IRS webpage, they will type the year for which forms and instructions are needed and the term "forms and publications." For example if they were looking for tax forms and instructions for year 2007, they would type "2007 forms and publications" into the search box.

Taxpayers will choose between taking the "standard deduction" or "itemized deductions". Most taxpayers with low incomes will take the standard deduction. The standard deduction is the amount of money taxpayers are allowed to subtract from their income. The amount of the standard deduction is determined by a taxpayer's filing status. Taxpayers must choose a filing status when they file a return. Choosing a filing status can be more complicated than it appears. If a taxpayer has questions about what status to choose, they should contact a tax professional. They may also call the IRS helpline (1-(800)-829-1040), and someone will guide them through the steps of choosing a filing status. The filing status choices are single, married filing joint, married filing separately, and head of household.

An exemption, like a deduction, will reduce your taxable income. In 2009, taxpayers will receive a $3650 exemption for themselves, their spouse, and an additional $3650 for each "qualifying child" or "qualifying relative" they claim on their return. The definition of "qualifying child" and "qualifying relative" can be confusing. The definition can be very difficult for non-traditional families to apply. Encourage your clients to seek help if they have any questions about who they can claim as a qualifying child or qualifying relative. Mistakes in this area of the tax return can be very costly to taxpayers.

If a family qualified for the maximum level of available refundable federal tax credits (excluding the new homebuyer's credit), they could receive a refund of over $6000.

The making work pay credit is a refundable credit of up to $400 for working individuals and $800 for people who file a joint return with their spouse. The credit is equal to 6.2% of taxpayers earned income.

To get the credit taxpayers must have a valid social security number. If you are filing a joint return, only one taxpayer needs a valid social security number to claim the credit.

Most form W-2 wage earners have already benefitted from the credit with less tax being taken out of their paychecks. However, even if a taxpayer has already received the full amount of the credit they are entitled to, they must claim it on their tax return. The credit will generally be claimed on the Schedule M.

This year the Earned Income Credit has been expanded to include a larger credit for families with 3 or more qualifying children. The EITC is a refundable credit available to taxpayers with or without children who have low to middle incomes. A taxpayer cannot claim the credit if they use the filing status "married filing separately" (meaning you are married, but you and your spouse choose to file separate tax returns), or if they are filing a "married filing joint" return, and their spouse does not have a valid social security number.

Taxpayers without children: If a taxpayer meets the income guidelines, a taxpayer may qualify for the earned income if they have earned income (income from a job), are between the ages of 25 and 65, and taxpayer (and their spouse if filing joint return) have a valid social security number.

Taxpayers with children: If a taxpayer meets the income guidelines and they have children, they may be able to claim the EITC with a "qualifying child". The basic rules to be a "qualifying child" are: (1) child must be related to taxpayer (their child, step-child, grandchild, brother or sister, or a niece or nephew), (2) the child must be younger than the taxpayer and under the age of 17 or under 24 if a full time student, or any age if totally and permanently disabled, and (3) taxpayer MUST live with the child for more than 6 months of the tax year (except under very limited circumstances). The rules for claiming a child that is not the taxpayer's son or daughter can be very complicated. Taxpayers in this situation should consult a qualified tax preparer to ensure they are eligible to take the credit. The credit is worth up to $5,657 for families with 3 qualifying children.

Maximum Adjusted Gross Income	Number of Qualifying Children
$43,279 ($48,279 married filing jointly)	3
$40,295 ($45,295 married filing jointly)	2
$35,463 ($40,463 married filing jointly)	1
$13,440 ($18,440 married filing jointly)	0

The Child Tax Credit is a non-refundable credit of $1000 for each qualifying child that a taxpayer claims an exemption for on their tax return. So, if a taxpayer has 2 dependants listed on their tax return and the box signifying "qualifying child" is checked for both of them, the taxpayer can claim a Child Tax Credit of $2000. That means that the tax owed by the taxpayer will be reduced by $2000. For many of our clients the Child Tax Credit will eliminate any tax that they will owe.

The Additional Child Tax Credit is a refundable credit. Many taxpayers will not owe enough tax to take full advantage of the Child Tax Credit. The Additional Child Tax Credit allows people with low incomes to receive as a refund all or part of their remaining Child Tax Credit. Taxpayers who have earned income of at least $3000, and at least one qualifying child may be able to take the Additional Child Tax Credit.

The Child and Dependent Care Credit is a non-refundable credit available to taxpayers who pay a caregiver to care for their qualifying child or disabled child or adult while they work or look for work. The limit on expenses is $3000 per child up to two children.

The credit is worth up to $1050 for one qualifying dependent and $2100 for two qualifying dependents.

The child/dependent care expenses must be work related. To be work related, the care must allow the taxpayer (and spouse if married) to work or look for work and the care must be for a qualifying person.

To claim the credit, you MUST identify the caregiver with their name, address and taxpayer ID number (social security number, ITIN or employer ID number).

The American Opportunity Tax Credit is a credit for expenses related to post-secondary education. Generally 40% of the credit is refundable. A taxpayer may be able to take the credit if the taxpayer, spouse or dependents were enrolled at or attending an eligible post-secondary education institution during the tax year.

Expenses that qualify for the credit are tuition and related course materials such as books, supplies and equipment needed for a course of study. Room and board, insurance, medical expenses, transportation and other personal costs do not qualify. Most students will receive a form 1098-T from their school that details the tuition paid and will be used to determine the amount of the credit.

The credit has also been expanded to students in their first four years of post-secondary education. The maximum credit is $2500. The maximum refundable portion of the credit is $1000. Students must be enrolled at least half-time in a degree program.

The Lifetime Learning Credit is also an education credit. The entire amount of this credit is non-refundable. It is available to all post-secondary students, and there is no limit on number of years it can be claimed.

Qualified expenses include tuition AND course-related books, supplies, fees and equipment if the expenses and fees are paid directly to the school and are required for enrollment.

Students can be enrolled less than half time and it does not need to be a degree program. The maximum credit is $2000.

Caveat: You cannot claim both the American Opportunity Credit and the Lifetime Learning Credit for the same student in the same tax year. You must choose one or the other.

The Retirement Savings Contribution Credit reduces the income tax a taxpayer may owe, and it encourages taxpayers to contribute to retirement plans or Individual Retirement Accounts (IRA's). A taxpayer can receive a tax credit of up to 50 percent of a maximum $2,000 contribution. The credit is non-refundable.

There is a credit for taxpayers who buy a home between January 1, 2009 and May 1, 2010. Taxpayers are only eligible if they have not owned a home during the 3 years prior to the purchase of the new home. The credit is refundable and worth 10% of the purchase price up to $8000.

There is also a credit for some homeowners who buy a new home in late 2009 and early 2010. This credit is limited $6500. Taxpayers who believe they qualify for the First-Time Homebuyer Credit may want to seek advice from a qualified tax professional.

The Minnesota Working Family Credit is a refundable credit based on the rules for the Earned Income Tax Credit. If a taxpayer qualifies for the EITC they will likely qualify for the MWFC as well.

The Minnesota Dependant Care Credit is a refundable credit available to taxpayers who pay for care of their qualifying child under age 13 or disabled, or adult dependent while they are at work or looking for work. It is similar to the Federal Credit.

The Minnesota K-12 Education Credit is a refundable credit available to families with low to middle incomes who paid for certain educational expenses during the tax year for their qualifying children. The credit is 75% of eligible expenses up to $1000 per child.

Examples of eligible expenses are: tutoring, academic books and materials, fees paid to others for transportation, music lessons, after-school enrichment programs, home computer hardware or educational software (up to $200 per family), academic summer camp and purchase or rental of "long-life" equipment such as calculators and musical equipment.

A family can qualify for the credit if they have one or two qualifying children and their income is less than $37,500. The maximum income to qualify for the credit increases $2000 for each additional qualifying child beyond two.

The Minnesota K-12 Education Subtraction is similar to a "deduction". It allows taxpayers to deduct from their taxable income certain expenses paid for K-12 education for their qualifying children. Taxpayers may deduct up to 100% of the expenses they pay up to a certain limit which is based on grade level.

The Subtraction is available to families of all income levels. Families may be able to claim both the Credit and the Subtraction if the expenses exceed the family limit for the credit, the excess can be applied to the Subtraction.

The property tax refund form is not filed with a taxpayer's regular Minnesota State Tax Return. It is due in August for Renters and in October for homeowners. This is a refund paid to renters and homeowners with low to middle incomes by the State. A renter will need to get a Certificate of Rent Paid from their landlord to claim the refund. A homeowner will need their property tax statement to claim the refund.

One of the best things you can do for your clients is to provide them with information about where they can find tax assistance. Many taxpayers do not speak English as a first language or have difficulty understanding the tax forms and rules. Unfortunately, there are many people who take advantage of taxpayers who do not understand the system or the rules.

Providing information about trustworthy, reliable tax assistance can save your clients money. There is currently no licensing requirement for tax preparers, meaning there is no guarantee that a paid preparer has knowledge of the tax rules or received any training in tax preparation.

Encouraging taxpayers that qualify for free tax preparation to take advantage of the service will allow the taxpayer to keep their entire refund and ensure that the person preparing their return has had some training. Additionally, because the preparers at the free tax preparation site assist primarily low to middle income taxpayers they may be more familiar with the credits available and the nuances in the rules that can lead to problems.

While the free Volunteer Income Tax Assistance (VITA) sites are a good option for many taxpayers, the preparers can still make mistakes. A taxpayer should review their return carefully and ask questions if they do not understand what their preparer has put on their return. A good tax preparer will accept questions and should be willing to explain. The taxpayer is ultimately responsible for the information on the tax return no matter who prepares it.

VITA sites provide qualifying filers with free tax help in completing their income tax forms. Most sites also provide free e-filing and refunds are typically available within 10 days. Sites may also provide information and access to banking, financial education, Individual Development Accounts (IDAs), home buying programs and small business opportunities.

AccountAbility Minnesota has several tax sites in the Twin Cities Metro Area and greater Minnesota, and serves individuals with incomes up to $30,000 and families with incomes up to $45,000. They also provide services for small businesses with incomes up to $50,000. AccountAbility Minnesota will file taxes at the following locations on a first come first served basis from January 26th through April 15th:

AccountAbility can assist self-employed taxpayers but they must get help at the AccountAbility Main Office in St. Paul and they must make an appointment by calling
(651) 287-0187 ext. 144 (English) or ext. 145 (Spanish).

Location

Start Times (first come, first served basis)

Extra Services Available

AccountAbility Minnesota (Main Office)

2610 University Ave. W., Ste 450

Appointments available

Walk-ins welcome

Tuesday - Thursday:

11 a.m. & 5:30 p.m.

Saturday: 8:30 a.m.

- Spanish-language interpreters

- Express Refund Loans & savings accounts available

- Credit report, financial planning

- Benefit screening

Eastside Financial Center

965 Payne Ave., St. Paul, 55106

Tuesday & Thursday: 5:30 p.m.

Saturday: 8:30 a.m.

- Express Refund Loans & savings accounts available

Hallie Q. Brown Community Center (Martin Luther King Community Center)

270 N. Kent

Tuesday & Thursday: 5:30 p.m.

Saturday: 8:30 a.m.

- Express Refund Loans & savings accounts available

Liberty Plaza

290 Arundel Street

Tuesday & Thursday: 5:30 p.m.

- Somali interpreters

- Oromo interpreters

NeDA

481 S. Wabasha St.

Saturday: 8:30 a.m.

- Spanish-language interpreters

Location	Start Times (first come, first served basis)	Extra Services Available
Tubman (formerly Chrysalis) 4432 Chicago Ave. S.	Tuesday & Thursday: 5:30 p.m.	- Spanish-language interpreters
La Conexión 1100 Anderson Lane	Saturday: 8:30 a.m.	- Spanish-language interpreters
Lutheran Social Service 2400 Park Ave. S.	Tuesday: 5:30 p.m. Saturday: 8:30 a.m.	- Express Refund Loans & savings accounts available
Minneapolis Urban League 2100 Plymouth Ave. N. Appointments available, walk-ins welcome	Tuesday & Thursday: 2 p.m. & 5:30 p.m. Saturday: 8:30 a.m.	- Express Refund Loans & savings accounts available - Benefit screening

Location	Start Times (first come, first served basis)	Extra Services Available
Creekside Community Center 9801 Penn Ave. S., Bloomington	Tuesday & Thursday: 5:30 p.m. Saturday: 8:30 a.m.
ResourceWest (formerly Hopkins Minnetonka Family Resource Center) 915 Mainstreet, Hopkins	Tuesday & Thursday: 5:30 p.m. Saturday: 8:30 a.m.
WorkForce Center 7115 Northland Terrace, Ste 100, Brooklyn Park	Jan. 30 - Feb. 20^th only Saturday: 8:30 a.m.	- Express Refund Loans & savings accounts available

AccountAbility Minnesota Greater Minnesota Locations for Filing 2009 Tax Returns:

Location	Start Times (first come, first served basis)	Extra Services Available
Catholic Charities 157 Roosevelt Rd., Suite 100	Feb. 2 - April 13^th only Tuesdays: 8:30 a.m. - 3:30 p.m.	- Express Refund Loans and savings accounts available
Salvation Army 400 Hwy. 10 South	Jan. 30 - April 14^th only Wednesdays: 4 - 7 p.m. Saturdays: 9 a.m. - noon	- Express Refund Loans and savings accounts available.
St. Cloud Technical College 1540 Northway Drive	Jan. 28 - April 15^th only Thursdays: 5 - 7:30 p.m.

Please visit AccountAbility Minnesota's website for a list of tax preparation sites in greater Minnesota. The list can be found by going t www.accountabilitymn.org then by clicking on "Taxpayer Services" on the left hand side of the page. While on the "Taxpayer Services" page, click on "Individual Tax Preparation" to access the list. The list will be available around January 31st.

Contact Information for AccountAbility Minnesota:
Website: www.accountabilitymn.org
Phone: 651-287-0187 ext. 1000

AARP (Association for the Advancement of Retired Persons) also provides free tax preparation sites throughout Minnesota. AARP Tax-Aide sites do not have strict guidelines on income or age. If you are low to middle income you should qualify for their services, however Tax-Aide sites will not prepare returns they determine to be "complex". To find a tax preparation site in your area you can either call AARP, or you can use their website after January 31st to locate the site nearest you. Please note that AARP Tax-Aide sites require appointments and the number of interpreters is also limited.

Phone Numbers:
1-888-227-7669 (English and Spanish)
1-877-434-7598 (TTY)
1-866-554-5381 (Minnesota Chapter)

Website Preparation Site Locator:
Go to the following website: www.aarp.org/money/taxaide
Then click on "Find Tax Aide Site". The link will be available sometime in mid to late January 2010.

The Minnesota Department of Revenue has a list of tax preparation sites throughout Minnesota. This information can be accessed on their website after January 31st or taxpayers can call the numbers listed below for more information.

The United Way can also help individuals locate a free tax preparation site. Simply call 211. 211 is free, confidential and available 24 hours a day, 7 days a week. English, Spanish and Hmong are available on the touchtone system, pressing "8" will give additional language options. Multi-lingual lines are available Monday thru Friday from 8:30AM - 5PM.

The IRS also provides tax preparation service at Taxpayer Assistance Centers throughout Minnesota. These centers will only prepare taxes for individuals who have income of $42,000 or less. All issues will be handled without an appointment, but an appointment may be required for complex tax issues or special need, such as a disability. Multilingual assistance is available in every office.

Bloomington
1550 American Blvd. East, Ste 700
Monday - Friday: 8:30AM - 4:30PM
(Closed 11:30AM - 12:30PM)
Phone: 651-312-8082

Duluth
515 West First Street
Monday - Friday: 8:30AM - 4:30PM
(Closed 1PM - 2PM)
Phone: 218-626-1624

Mankato
1921 Excel Drive
Monday - Friday: 8:30AM - 4:30PM
(Closed 11:30AM - 12:30PM)
Phone: 507-625-4977

Minneapolis
250 Marquette Avenue
Monday - Friday: 8:30AM - 4:30PM
Phone: 651-312-8082

Rochester
21 SW Second Street
Monday - Friday: 8:30AM - 4:30PM
(Closed 11:30AM - 12:30PM)
Phone: 507-281-3044

St. Cloud
3800 8th Street N
Monday - Friday: 8:30AM - 4:30PM
(Closed 1PM - 2PM)
Phone: 320-251-9261

St. Paul
30 East 7th Street
Monday - Friday: 8:30AM - 4:30PM
Phone: 651-312-8082

** NOTE: Phone numbers listed above are recorded messages with information about office hours, locations and services provided in that office. You may leave a message to request an appointment. You will receive a return call within 2 business days.

LEGAL RESOURCES FOR TAXPAYERS
Sometimes mistakes are made on a tax return or the IRS has questions about information on a tax return. If this happens the IRS will "audit" the tax return. If a taxpayer is audited the IRS will usually send a letter requesting the taxpayer send additional information. This can be stressful and the letters sent by the IRS are often unclear. There are currently two organizations that provide taxpayers with low to middle incomes with free legal assistance.

The Tax Project provides service to clients with low to middle incomes who are dealing with IRS tax audits, tax collection and other tax issues. The Tax Project does not assist with tax preparation.
If a taxpayer has a problem they can call the intake line at (612) 334-5970. Interpreters are available.

University of Minnesota Law School Low Income Taxpayer Clinic (LITC):
The University of Minnesota Law School Low Income Taxpayer Clinic also provides service to people with low to middle incomes. The Clinic is staffed by law students who are supervised by an attorney. The University of Minnesota LITC provides service to clients with low to middle incomes who are dealing with IRS tax audits, tax collection and other tax issues. The LITC does not assist with tax preparation.
If a taxpayer has a tax problem they can call the intake line at (612-625-5515). Interpreters are available.

RESOURCES FOR PROMOTING TAX CREDITS AND ENCOURAGING TAXPAYERS TO FILE A TAX RETURN

Each year millions of dollars go unclaimed by taxpayers who qualify for tax credits but either do not file or do not properly claim the credits. These tax credits are money that taxpayers are entitled to, but miss out on because they are unaware that the credits exist. In the recent economic downturn, there are many individuals who qualify for these tax credits and may not be aware of it.

Taxpayers need to know that many of the tax credits available to them are refundable. This means that they are entitled to the money even if they have no requirement to file taxes or will have zero tax liability for the year. As discussed above, the earned income credit is a large refundable credit that many taxpayers may qualify for. Other credits are also available and some are also refundable.

Taxpayers also must understand that they should only claim credits that they are entitled to. This means that they should be careful in selecting where they have their taxes prepared. Many commercial preparers seek to maximize taxpayers' refunds in order to maximize fees or interest collected on Refund Anticipation Loans. The many free tax preparation sites listed in this handbook provide a valuable service to taxpayers at no cost. Taxpayers should ask questions when tax preparers suggest credits for taxpayers to claim.

The Center on Budget and Policy Priorities offers some great promotional materials with information to help taxpayers understand the importance of filing a tax return. They can be found online at The 2010 Tax Credit Outreach Program's website. These materials include:

These materials can be found online at www.cbpp.org/eic2010 . You can also order a 2010 promotional packet through the website, and if you order it once, you should get the packet each year.

The IRS website is another excellent resource for obtaining EITC promotional materials as well as specific information regarding qualification for the EITC. The IRS has a main EITC page which includes links to all of the site's EITC resources. The EITC page can be accessed by entering "Earned Income Credit" into the search box at the top of the IRS homepage and then clicking on the recommended search result.

Help Minnesota Save's website, www.helpmnsave.org, (click the "taxes" link on the left hand side of the page) provides very helpful resources and tools for taxpayers and those who want to educate and promote the tax credits.

Organizations can use this website to order Greater Twin Cities United Way Claim It! campaign posters. They are available in several languages. Organizations should order these in the late fall as soon as they become available or they can print them from the website.

The Help Minnesota Save website is of the most comprehensive websites for clear information on tax credits. It also provides links to information about the Volunteer Income Tax Assistance (VITA) sites. This would be an excellent first stop for anyone who wants to learn more about the tax credits and tax resources available in Minnesota.

On the lawhelp.org website taxpayers can find fact sheets about various tax topics, including detailed information on federal and state tax credits. The fact sheets are meant to provide plain language information about who is eligible for the various credits. The Minnesota Law Help page can be found here:

Click on TAXES tab to get to the tax fact sheets. The fact sheets are available in several different languages.

For those who want more information about tax credits and the rules for qualifying for certain tax credits, the IRS has made information and assistance available online, via phone or in print. Many forms and publications which explain the details of the tax rules can be obtained on the IRS website or at local IRS Taxpayer Assistance Centers. The following materials are the most significant sources of detailed tax information:

All of these materials and other are available online at www.irs.gov by typing the word "publication" and the number into the search box. They are also available at IRS Taxpayer Assistance Sites and most public libraries.

If a taxpayer has questions about how to prepare their return or about specific items on their tax return they can also call the IRS helpline at (800) 829-1040. A tax specialist with the IRS will walk a taxpayer through the steps to determine if they may be eligible for a particular filing status, deduction or credit.

Thank you for attending this training and your interest in helping taxpayers! Your assistance in promotion of these credits will help families get the additional financial support they are entitled to.

Tax Year 2009