Tax refunds are important. For many families, the tax refund is the most important financial event of the year, and families make careful plans to use the tax refund to improve their family’s wellbeing.
The first step in making wise use of your tax refund is to not spend too much money to file your tax return. Many Iowans are eligible for FREE tax preparation.
Free tax preparation by IRS-certified volunteers. If your income is below about $67,000/year you may be eligible for free tax preparation through the Volunteer Income Tax Assistance (VITA) program. Find a site near you!
In addition to a general income guideline, VITA sites also must follow rules set by the IRS about the types of tax issues they can address. Review those rules below:
- VITA sites cannot assist with the following tax returns:
- Tax returns for farmers (but they can do tax returns for employees who work for farmers).
- Tax returns for landlords who have rental income.
- Tax returns for people who have income in cryptocurrency or digital assets.
- VITA can do tax returns for self-employed people or small business owners only if:
- There are no employees apart from the main owner,
- They do not keep any inventory on hand,
- The business does not use a home office deduction, and
- The business expenses are less than $35,000 per year.
- VITA can do returns with income from Cancellation of Debt (1099-C) only if the taxpayer was solvent at the time of the debt relief.
Contact the tax site nearest to you with any additional questions about your eligibility.
Free Do-it-yourself tax preparation. If your income is below $84,000, you can use VITA’s free do-it-yourself software. Learn more by sending an email to centraliowavita@gmail.com (Central Iowa VITA); an auto-reply will provide you with the link and instructions.
Use your tax refund to build security! Every family faces emergencies or unexpected expenses each year – due to car repair, medical bills, missed work, or some other reason. Saving a portion of your tax refund can help you navigate those tough times smoothly, with less stress. Saving money from your refund can also help cover large, predictable expenses throughout the year, such as back-to-school costs, vehicle registration, holiday spending, or summer daycare for school-aged children.
To make sure you receive all the tax deductions and credits you are entitled to, check this list before you prepare your tax return.
This article was written by Barb Wollan.
Barb is a Health and Human Sciences Educator with special interest in personal finance, especially retirement education, Volunteer Income Tax Assistance, and families at risk. Her goal is to help Iowans reach their important long-term and short-term financial goals.
