Please note: This is an archived article. It does not apply to current-year tax preparation. Please see our current article to read up-to-date tax information.

Table of Contents

• Filing Requirements
• Do I need to file?
• What if I do not have the money to pay?
• Taxable Income
• What income is taxable?
• Is money I receive from public benefits taxable?
• Are Social Security retirement benefits and disability benefits taxable?
• Is military pay taxable?
• Are unemployment benefits taxable?
• Is child support or foster care payments taxable?
• Is alimony taxable?
• Filing Status
• What is a filing status? What are the definitions of each status?
• Deductions
• What is the standard deduction?
• What are itemized deductions?
• Exemptions
• What are exemptions? What information do I need to know before I claim an exemption?
• Credits
• What are credits? How do they help me?
• What credits are avaible?
• Child tax credit
• Additional child tax credit
• Earned income tax credit
• Rules for eligibility
• Expanded NJ EITC
• Effect of EITC on welfare benefits
• Education credit
• Discontinued credits
• Information on new 2007 credits
• ITIN Information
• What is an ITIN?
• How do I apply for an ITIN? Where do I get the application? What forms do I use? How long does the process take?
• How can my ITIN be used?
• Refund Anticipation Loan
• Notarios
• When you sign your return. . .
• Resources for low-income taxpayers
• Where can I get assistance with preparing my tax return?
• Where can I get assistance if I get a letter from the IRS?

Filing Requirements

Do I need to file a tax return?

Whether you need to file depends on your income, your filing status and your age. However, if you are a low-income worker or wage-earner, it is a good idea to file because you may be eligible for exemptions, deductions and credits which may create a refund for you. You are not entitled to a refund unless you file a return.

The following IRS chart, from IRS Form 1040, sets forth the general rules for determining if you must file:

You must file if you had advance earned income credits withheld from your pay.

What if I do not have the money to pay my taxes?

First and foremost, FILE YOUR RETURN, even if you do not have the money to submit to the IRS. Filing your return on time will prevent the possibility of penalties that the IRS can legally impose for a delinquently filed tax return.

Next, there are several options. When you submit your return, you should pay as much as you possibly can toward your tax bill. A partial payment will lower interest owed to the IRS for the late payment. Any unpaid balance is subject to interest and a monthly late payment penalty, so it is in your best interest to pay your tax liability to the greatest extent possible.

The IRS offers several payment options. The first is an installment agreement. An installment agreement is one in which the payment amount is based on your ability to pay and should be an amount that can be maintained over the lifetime of the installment agreement. The installment agreement can be set up in three ways: direct debits made from your bank accounts to the IRS, payroll deductions from your employer to the IRS, or a regular installment agreement wherein you are responsible for submitting a monthly check to the IRS. To apply for an installment agreement, either submit a Form 9465, Installment Agreement Request, or write your own request for an installment agreement and attach the request to the front of your tax return. On your request, include the amount you can pay each month and the date in each month that you wish to make your payment. If you desire to use direct debit, provide your checking account number and bank routing number. You may also attach a voided check to the request. For a payroll deduction, attach a Form 2159, Payroll Deduction Agreement, completed by your employer. The IRS will usually respond within 30 days, either approving or disapproving your request. If your request is accepted, you will be charged a one-time fee of $43. If your request is denied, the IRS will generally request additional information. Remember, penalties and interest will be added to the balance, even if the installment agreement is approved. For more information on this option, go to the IRS website and enter the keyword “installment agreement.”

If you file your return but do not pay the tax due and you do not request an installment agreement, it is likely that you will receive notices from the IRS. Do not ignore the notices. If you ignore the notices and do not make arrangements to pay your taxes, the IRS may file a Notice of Federal Tax Lien and will be able to take collection action, which could include a Notice of Levy or offsetting any possible tax refunds you may be entitled to in the future.

Your rights are protected throughout the collection process, and the IRS is willing to work with people to find solutions when they cannot pay their taxes. For more information on this, you can obtain Publication 594, The IRS Collection Process, and Publication 1, Your Rights as a Taxpayer. Also, you can contact the IRS at 800-829-1040. Before you call, have your financial information with you, such as pay stubs; payments being made on homes, cars, and credit cards; medical information; child care payments; and student loan payments.

Taxable Income

What money is taxable?

If you work and earn wages, your income is generally taxable income. Many times, your employer has already withheld taxes for you and submitted these taxes to the federal and state governments. Often, the amounts withheld are too high and, when you file a tax return, the government will return the excess amount to you in a refund. If you received wages during 2007, your employer is obligated to send you a Form W-2 with the wages and taxes paid by January 31, 2008.

Is money I receive from public benefits taxable?

Generally, you do not have to pay taxes on benefits that you receive from a public welfare fund. This includes benefits like TANF, GA or SSI, child care grants, workers’ compensation, and housing assistance payments. Also, you do not need to include most benefits paid by the Veteran’s Administration.

Are Social Security retirement benefits and disability benefits taxable?

If you receive Social Security retirement benefits or disability benefits, your income is not taxable if it is the only income you received throughout the year. If you had other sources of income, from work or investments, some of  your Social Security or disability benefits may be taxable. About one-third of people who get Social Security have to pay income taxes on their benefits. Generally,

• If you use the filing status single and your combined income is between $25,000 and $34,000, you may have to pay taxes on 50 percent of your Social Security benefits. If your combined income is more than $34,000, up to 85 percent of your Social Security benefits is subject to income tax.
  
  
• If you file a married filing joint return, you may have to pay taxes on 50 percent of your benefits if you and your spouse have a combined income that is between $32,000 and $44,000. If your combined income is more than $44,000, up to 85 percent of your Social Security benefits is subject to income tax.
  
  
• If you are married and file a separate return, you probably will pay taxes on your benefits.

At the end of each year, you will receive a Social Security Benefit Statement (Form SSA-1099) showing the amount of benefits you received. You can use this statement when you complete your federal income tax return to find out if you have to pay taxes on your benefits.

Is military pay taxable?

Some types of military compensation are included in gross income and are therefore subject to tax, while other military pay is not taxable. Pay while serving in a designated combat zone or qualified hazardous duty are not taxable, but basic pay and pay while training are taxable. Allowances such as basic housing allowance and moving allowance are not taxable.

Are unemployment benefits taxable?

If you receive unemployment compensation, you will receive a Form 1099-G showing the total amount you received in 2007. Unless you have elected to have taxes withheld from your weekly checks, you are responsible for reporting the income and paying income tax on the amount received.

Is child support or foster care payments taxable?

Money you receive for child support is not taxable. Money you receive from a state or other licensed foster care placement agency for the care of a foster child in you home is generally not taxable.

Is alimony taxable?

Money you receive as alimony is taxable and should be included on your return. Conversely, if you pay an ex-spouse alimony, you can deduct that amount on your return.

Filing Status

What is a filing status? What are the definitions of each status?

Generally, your marital status on the last day of the year determines your filing status for the whole year. For example, if you were married on December 31, 2007, you are considered married for the entire year. If you are divorced on December 31, 2007, you are considered unmarried for the whole year.

There are five filing statuses: single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child. Here are the some important guidelines about filing status:

• For federal tax purposes, a marriage means only a legal union between a husband and wife. One of the following conditions must also be met:
• You are married and living together as husband and wife;
• You are living together in a common law marriage that is recognized in the state where you now live or in the state where the common law marriage began;
• You are married and living apart, but not legally separated under a decree of divorce or separate maintenance; or
• You are separated, but not under a final court decree of divorce.
  
  
• To be unmarried, you must be unmarried on the last day of the year or legally separated from your spouse under a divorce or separate maintenance decree. State law governs whether you are married or legally separated or divorced.
  
  
• If you obtain a court decree of annulment, which holds that no valid marriage ever took place, you are considered unmarried. You must also amend, or correct, returns for the past three years (or whatever years are not barred by the statute of limitations), changing your filing status to single or head of household. The form to use to amend your returns is a 1040X.
  
  
• If your spouse died during the year, you are considered married for the whole year for filing purposes.
  
  
• Once you file a joint return, you cannot change your mind and change the return to a separate return, but if you file a separate return, you can generally change to a joint return any time within three years of the due date of the returns.

It is important to select the correct filing status, since it affects your exemptions, standard deductions, and other credits. Here are further facts about filing status:

• If you are married, you and your spouse can choose to file as Married Filing Jointly. On a joint return, you report your combined income and deduct your combined expenses. You can file a joint return even if only one of you had income. If you and your spouse decide to file a joint return, your tax may be lower than if you choose a different filing status. Also, your standard deduction may be higher, and you may qualify for tax benefits and credits that do not apply to all other filing statuses.
  
  There is one thing to remember about choosing this filing status – you and your spouse are both jointly and individually responsible for any tax that is owed. That means that, even if your spouse earned the money, the IRS can seek payment of any tax due from not just him, but from you as well. There are three ways to be relieved of this responsibility – known as innocent spouse relief, relief by separation of liability, and equitable relief. An article on the relief available and how to apply for the relief can be found in IRS Publication 971 and at Joint Tax Returns and Innocent Spouse Relief.
  
  
• If you are married, you and your spouse can choose to file as Married Filing Separately. This filing status may benefit you if you only want to be responsible for your own tax or if it results in a lower tax rate. If you and your spouse cannot agree to file a joint return, use this status unless you qualify as Head of Household.
  
  Usually, if you are married and you choose this filing status, your tax is higher than if you file jointly. Also, you can only report your own income, personal exemption, and credits. You can only claim an exemption for your spouse if your spouse had no income and was not the dependent of another person.
  
  Finally, there are certain restrictions if you choose this filing status:
  • You cannot take the credit for child and dependent care expenses in most cases.
  • You cannot take the earned income tax credit.
  • You cannot take the education credits.
  • If you lived with your spouse during any part of the year, you cannot claim the credit for the elderly or disabled. If you did live with your spouse, you will have to include in income the amount of any Social Security or equivalent railroad retirement benefits you received. Also you cannot roll over amounts from a traditional IRA into a Roth IRA.
  • If your spouse itemizes deductions, you cannot claim the standard deduction.
  • The following credits and deductions are reduced at income levels that are half of those for a joint return: the child tax credit, the retirement savings contributions credit, itemized deductions, and the deduction for personal exemptions.
    
    
• The Head of Household filing status can be used if you are unmarried or considered unmarried on the last day of the year, you paid more than half the cost of keeping up a home for the year, and a “qualifying person” lived with you in your home for more than half of the year. If the “qualifying person” is your dependent parent, he or she does not have to live with you.
  
  The tax rate for Head of Household will generally be lower than rates for singles or married filing separately. The standard deduction will be higher as well.
  
  The following chart, found in IRS Publication 501, can be used to determine if you have a qualifying child for Head of Household filing status:
  

  IF the person is your . . .	AND . . .	THEN that person is . . .
  qualifying child (such as a son, daughter, or grandchild who lived with you more than half the year and meets certain other tests)	he or she is single	a qualifying person, whether or not you can claim an exemption for the person.
  	he or she is married and you can claim an exemption for him or her	a qualifying person.
  	he or she is married and you cannot claim an exemption for him or her	not a qualifying person.
  qualifying relative who is your father or mother	you can claim an exemption for him or her	a qualifying person.
  	you cannot claim an exemption for him or her	not a qualifying person.
  qualifying relative other than your father or mother (such as a grandparent, brother, or sister who meets certain tests)	he or she lived with you more than half the year, and you can claim an exemption for him or her	a qualifying person.
  	he or she did not live with you more than half the year	not a qualifying person.
  	you cannot claim an exemption for him or her	not a qualifying person.

  
  If you are divorced, you may have a separate agreement with your ex-spouse concerning who can claim an exemption of children.
  
  
• You may be eligible to use Qualifying Widow(er) with Dependent Child as your filing status for two years following the year your spouse died. For example, if your spouse died in 2005 and you have not remarried, you may be able to use this filing status for 2006 and 2007. Using this filing status allows you use the lower joint return rates and the highest standard deduction amount, but you cannot file a joint return. To use this filing status, the child or children must live in your home all year and you must have paid more than half the cost of keeping up the home (rent, electricity, etc.).
  
  .
• If you cannot use any of the above four filing statuses, you must file as single.

Deductions

What is the standard deduction?

The standard deduction is a dollar amount that reduces the amount of income on which you are taxed. You cannot take the standard deduction if you claim itemized deductions.

In some cases, your standard deduction can consist of two parts: the basic standard deduction and additional standard deduction amount, for age, or blindness, or both.

In general, the basic standard deduction is adjusted each year for inflation and varies according to your filing status. The basic standard deduction of an individual who can be claimed as a dependent on another person's tax return is the greater of:

• An amount specified by law, or
• The individual's earned income plus a specified amount (but the total cannot be more than the basic standard deduction for his or her filing status).

The additional standard deduction amount for age, or blindness, or both is specified by law and varies based on your filing status. If you file a separate return and can claim an exemption for your spouse, you will be allowed any additional amounts that apply to you or your spouse.

The additional amount for age will be allowed if you are age 65 or older at the end of the tax year. You are considered to be 65 on the day before your 65th birthday.

The additional amount for blindness will be allowed if you are blind on the last day of the tax year.

For example, a single taxpayer who is age 65 and legally blind would be entitled to a basic standard deduction and additional standard deductions for age and blindness.

If you or your spouse were 65 or older or blind at the end of the year, be sure to claim the additional standard deduction amounts by checking the appropriate boxes on Form 1040A or Form 1040. The additional standard deduction amounts cannot be claimed on Form 1040EZ.

Certain individuals are not entitled to the standard deduction. They are:

• A married individual filing a separate return whose spouse itemizes deductions,
• An individual who was a nonresident alien or dual status alien during any part of the year, or
• An individual who files a return for a period of less than 12 months due to a change in his or her annual accounting cycle.
  
  For 2007, the standard deductions are:

  Single $5,350
  Married Filing Jointly $10,700
  Head of household $7,850
  Married Filing Separately $5,350

For more information, refer to IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.

What are itemized deductions?

Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. Money paid for medical care, mortgage interest, taxes, charitable contributions, casualty losses and miscellaneous deductions can reduce your taxes. If the total amount spent on those categories is more than the standard deduction, you can usually benefit by itemizing.

Exemptions

What are exemptions? What information do I need to know before I claim an exemption?

Exemptions reduce your taxable income. For the year 2007, you can deduct $3,400 for each exemption you claim. You are generally allowed one exemption for yourself, one for your spouse, and one for each of your dependents. If you are a nonresident alien (other than a resident of Canada or Mexico), you can only use an exemption for yourself. You are not allowed to claim exemptions for dependents. If you can be claimed as a dependent by another person, you cannot take a personal exemption, even if the other person does not actually claim you as a dependent. Your spouse is never considered your dependent.

A dependent is a “qualifying child” or a “qualifying relative.” The following chart, from IRS Publication 501, provides guidance.

If you can claim an exemption for your dependent, the dependent cannot claim his or her own exemption if he or she files a tax return. You cannot claim a married person as a dependent if he or she files a joint tax return.

You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico for some part of the year.

You must list the Social Security number for any dependent for whom you claim an exemption. Without a Social Security number, the exemption may be disallowed and your return will be reduced. If such dependent does not have a Social Security number, you should apply for one by filing a Form SS-5 with the Social Security Administration. If you do not have the Social Security number by the time you need to file your return, you should use Form 4868 to ask the IRS for an automatic extension of time to file the return. If your dependent is not eligible for a Social Security number, your dependent must apply for an individual taxpayer identification number using Form W-7.

Credits

What are credits? How do they help me?

Credits may increase your tax refund and lower the amount of tax you owe the IRS. Each credit has different rules and works differently. Some credits simply reduce and possibly eliminate the tax you owe while other credits may actually put money in your pocket. You must file your tax return to claim a credit.

What credits are available?

• The CHILD TAX CREDIT may be available to you if you have a child who was under the age of 17 at the end of 2007. You cannot use a Form 1040EZ but must use a Form 1040, 1040A or 1040NR. The child tax credit will not affect your ability to receive food stamps, public housing, welfare, or SSI.
  
  To qualify for the credit, you must be raising the child as your own. The child can be your son, daughter, stepson, stepdaughter, adopted child, brother, sister, niece, nephew, grandchild, or eligible foster child (one placed with you by a court or authorized placement agency). You must be able to get a dependent exemption on your return for the child, and the child must be a citizen or resident alien with a Social Security number. If the child does not have a Social Security number at the time you need to file the return, you should apply through the Social Security Administration for a number and use Form 4868 to request an automatic extension of time to file your tax return until you get the child’s Social Security number. For each child you claim, you get $1,000 deducted from the taxes owed to the government. Generally, the credit does not pay you a refund; it simply lowers your taxes.
  
  
• Depending on your income, you may be eligible for the ADDITIONAL CHILD TAX CREDIT. If you qualify for this credit, you will receive a refund if the child tax credit reduces the taxes you owe and generates a refund. You must use IRS Fo​rm 8812 to claim the additional child tax credit.
  
  
• THE EARNED INCOME TAX CREDIT is a credit that is only available to you if you are a United States citizen or resident alien with a Social Security number and if you have earned income. If you receive a Social Security number after you file your tax return and you qualify for the credit, you may go back up to three years to claim the credit by filing an amended tax return. This is true even if you used to use an Individual Taxpayer Identification Number (ITIN) or invalid Social Security number on your previous returns.
  
  You must have earned income to apply for this credit. This includes income from wages, tips, and self-employment. The following are NOT considered to be earned income: unemployment benefits, child support, Social Security benefits, child support, pensions, alimony, welfare benefits, food stamps, job training benefits, and interest.
  
  You must use the filing status single, married filing jointly, head of household, or qualifying widower. You cannot use married filing separately. You must file a Form 1040 to claim this credit. You are not allowed to use Form 1040EZ or Form 1040A.
  
  You cannot claim the Earned Income Tax Credit if you have investment income, such as dividends or interest or rents, of more than $2,800 for the taxable year 2007.
  

  Rules for eligibility

  A qualifying child for the Earned Income Tax Credit is not the same as a qualifying child for purposes of filing status. A qualifying child for the EITC must meet each of the relationship, age, residence, self-support, and citizen/resident tests.

  • The relationship test means that the child you are claiming is your son, daughter, adopted child, stepchild, grandchild or great-grandchild. It also includes your brother, sister, step-brother, step-sister, niece, nephew, or descendants of these relatives. It includes an eligible foster child, as long as the child was placed with you by an authorized placement agency.
  • The age test means that the child must be under age 18 at the end of the year or a full-time student under 24. To be a full-time student, the child must be enrolled in school full time for at least five months of the year.
  • The residence test means that the child must live with you in the United States for more than half the year.
  • The self-support test means that the child cannot provide more than half of his or her own support.
  • The citizen/resident test means that the child must have a valid Social Security number.
  
  All of these tests must be satisfied in order for a child to qualify.
  
  Last summer, Governor Corzine expanded the NJ Earned Income Tax Credit program to include nearly 300,000 additional low-income workers and their families. All residents who are eligible and file for a federal earned income credit can now also receive a New Jersey earned income tax credit. Previously, eligible applicants had to have New Jersey gross income of $20,000 or less and at least one qualifying child.
  
  The NJ EITC is a percentage of your federal EITC equal to 20% of the federal EITC amount. For example, if your federal earned income tax credit is $3,000, the amount of your NJ EITC will be 20% of $3,000, or $600. Part-year New Jersey residents who qualify for the NJ EITC must prorate the amount of the credit based on the number of months as a New Jersey resident.
  
  If your filing status is married/civil union partner, filing separate return, you may not claim the NJ EITC.
  
  To be eligible for the federal and NJ EITC, those filing must have earned income from wages or self-employment. For the 2007 tax year, employed individuals must have adjusted gross income of less than:
  
  
  • $37,783 ($39,783 if married filing jointly) with two or more qualifying children;
  • $33,241 ($35,241 if married filing jointly) with one qualifying child; or
  • $12,590 ($14,590 if married filing jointly) with no qualifying child/children.
  
  
  No one with more than $2,900 in investment income, such as interest or dividends, can claim the EITC.
  
  To be eligible for the NJEITC, a taxpayer must both file for and receive the federal credit, and file a New Jersey resident income tax return. You must file the returns, even if you are not required to file a return because your income is considered too low to be required to file or owe taxes.
  
  Applying for the Earned Income Tax Credit and being eligible to receive the credit does not affect welfare benefits.
  
  
• Education credit
  
  Two types of credits can help with the cost of education - the Hope credit and the lifetime learning credit.
  
  The Hope credit is a tax credit for students in their first or second year of higher (after high school) education. The eligible student must be enrolled in a program that leads to a degree, certificate, or other recognized education credential. Check with the school to make sure it is a recognized institution.
  
  If your parents support you and claim you as a dependent on their income tax return, they are the ones who get to use the credit (and it is their income that is counted in determining whether or not they will get the credit). Even if your parents are the ones entitled to the credit, expenses that you pay will be counted toward the credit. If you support yourself or your spouse supports you, then you get to claim the credit. To file for a Hope credit, you must complete a Form 8863.
  
  The lifetime learning credit has a maximum credit of $2,000 per family but can be applied to both higher education programs and to courses used to improve job skills. In other words, you don’t have to be trying to get a degree in order to get the credit. You can qualify for this credit even if you are taking only one class. And the felony drug rule doesn’t apply. This credit also gets smaller as income gets bigger—just as it does in the Hope credit. To file for a lifetime learning credit, you must complete a Form 8863.
  
  In any one year a student can take only one of the education credits. However, if you have two qualifying students in a family, you can take the Hope credit for one student and the lifetime learning credit for the other.
  
  Both the Hope and lifetime learning credits are nonrefundable credits. This means that you can use the credits to reduce the federal income taxes you owe, but you will not get a refund if your tax liability has been reduced to $0.
  
  
• Discontinued credits
  
  Each year, Congress decides that certain credits should no longer be available to taxpayers. For 2007, the telephone excise tax is no longer available. For information on other discontinued credits, visit the IRS Web site.
  
  
• Information on new 2007 credits
  
  Each year, Congress decides that certain people in certain situations are entitled to new credits. For example, people who lived in California in 2007 and experienced losses related to the wildfires will get quicker processing of disaster loss claims. For more information on new credits, visit the IRS website.

ITIN Information

What is an ITIN?

ITINS, or Individual Taxpayer Identification Numbers, should be used to file your return if you cannot legally obtain a Social Security number. ITINS are used for tax reporting purposes only. These are not general identification numbers and will not authorize you to work in the United States or receive Social Security benefits. However, in the future, if you are able to legally obtain a Social Security number, the income that you have reported using the ITIN may be used to establish and increase Social Security benefits.

How do I apply for an ITIN? Where do I get the application? What forms do I use? How long does the process take?

To obtain an ITIN, you need to complete a Form W-7, Application for IRS Individual Taxpayer Identification Number. The form is available at the IRS website or by calling 1-800-TAX-FORM. You must provide certain identification documents which are listed on the application form. Generally, it takes six weeks to receive a letter from the IRS with your ITIN number.

How can my ITIN be used?

The IRS keeps all its return information strictly confidential. That means that if you use an ITIN to file a return because you have worked in the United States but do not have a Social Security number, that information will not be shared with any other federal or state agency, including immigration.

Refund Anticipation Loans

Refund anticipation loans are LOANS. The loan is made to you in amount equal to or less than the amount you will get from the IRS as a tax refund.

Refund anticipation loans have very high interest rates. That means that in addition to paying back the money you have borrowed, you must pay interest, ranging from 50 percent to 700 percent. Instead of keeping your entire refund, you are not only turning over the refund over to the lender, you will have to turn over the refund and the interest to the lender.

If the IRS does not agree with the numbers on your tax return and does not refund the amount of money you anticipated, you will still owe the lender the full amount you borrowed and the interest on that amount.

Refund anticipation loans are not that much quicker than waiting for the refund from the IRS. If you file electronically, the IRS can send your refund to you within 10 to 14 days. Even if you do not file electronically, you should receive your refund in a few weeks. To check on the status of your refund, you can contact the IRS at 1-800-829-1040 or go the IRS website.

Notarios

What is a notario?

Notarios, in much of Latin America, are attorneys. However, in the United States, a notary public is not a lawyer, an accountant, or a licensed qualified tax preparer and thus cannot give legal advice or prepare tax returns. In the United States, a notary public can only administer oaths and witness signatures.

Unfortunately, scam artists, using the title notario, have preyed on immigrants with limited English skills and little understanding of the American legal system by misrepresenting themselves as lawyers or tax preparers. Therefore, beware of so-called "notarios” who are providing legal services or tax preparation services under the auspices of a state law or city ordinance because they might be involved in the unauthorized practice of law or unauthorized preparation of tax returns.

When you sign your return. . .

ONE LAST POINT – READ AND UNDERSTAND YOUR RETURN BEFORE YOU SIGN AND FILE IT! You are ultimately responsible for everything on your return, whether you had it prepared for you or you prepared it yourself. When you sign and file your return, you are stating that you have reviewed every line of the return and you agree with everything on the return. Be careful! If you do not understand an entry made by a preparer, make sure you ask questions until you understand how and why the preparer completed the return, and only sign the return if you agree with it. If you cannot prepare your return by yourself, go to one of the free sites listed below. The tax laws in the United States are complex and the tax forms are confusing, and that is why there are so many free programs to help you.

Resources for low-income taxpayers

Where can I get assistance with preparing my tax return?

• VITA (Volunteer Income Tax Assistance) sites throughout New Jersey will help you prepare your forms if your income is below $35,000. To get information on the site closest to you, call 1-800-829-1040 or go to the IRS website.
  
  
• Trained IRS agents can answer questions and can be reached at 1-800-829-4933 or 1-800-829-1040. If you are hearing-impaired and have TTY equipment, you can call 1-800-829-4059.
  
  
• Tax-Aide is a free tax-preparation program sponsored by the Association for the Advancement of Retired Persons (AARP for senior citizens. To find the Tax-Aide office nearest you, call 1-888-AARP-NOW or visit AARP’s website.
  
  
• Community centers and organizations throughout the state run free programs for low-income taxpayers. Check your newspapers to find more information.
  
  
• The IRS has a Free File program which makes tax software programs available to eligible taxpayers for free. The Free File software programs will help you complete your income tax return and will then file the return with the IRS for you AT NO COST. To use Free File, you must use a computer and go to Free File Home – Your link to Free Online Filing (from the IRS website). You will find helpful information to assist you with filing your federal return online. Click the “ Start Now” button to review the list of tax software companies and select one that best suits your needs. Once you select a company link from the list, you will be notified, that you are leaving the IRS Web site and you will be taken directly to that company's Web site to begin preparation of your federal income tax return. Remember, you must access the company through the IRS website to use Free File. As you start using the program, you will be asked a series of questions. Your answers to these questions will allow the program to prepare your return and calculate your taxes and refund. When you are finished answering the questions and your return has been prepared by the program, your return will be automatically electronically filed. The Free File program will only help you with your federal income taxes. Thus, you should consider one of the above options for your state income taxes.

Where can I get assistance if I get a letter from the IRS?

THE TAXPAYER LEGAL ASSISTANCE PROJECT at Legal Services of New Jersey can assist you if you receive any letter or notice from the IRS challenging items on your tax return. The Taxpayer Legal Assistance Project (TLAP) can also assist you with IRS collection matters. TLAP represents low-income individuals in legal disputes with the IRS. TLAP does not prepare tax returns. If you have a tax problem, and to see whether you are eligible for representation, call 1-888-576-5529 and tell the person who answers the telephone that you have a tax problem.​​​​​​​​​​​

This information last reviewed: Nov 2, 2011