In 2001, Martha became a homeowner and dealt with everything that goes along with homeownership: property taxes, deductions, exemptions, etc.

Like many people, she was overwhelmed and intimidated about her taxes and paid a lot of money—money she didn’t really have—for someone else to prepare them.

Martha’s income level qualified her for free tax preparation and she was pleasantly surprised to get a large refund. Martha got her taxes done for free and saved her more than $200 in tax preparation services.

She said the free tax prep volunteers were friendly, professional and helpful and she felt “so comfortable” asking questions about her tax forms.

“My annual refund is now a steady part of my income,” Martha said, who works at Family & Children’s Service in Minneapolis. She spends her professional day helping people as a Family Life Education Specialist.

Martha also spends her personal day helping others: she’s made several referrals to Claim It!  She said her goal is “to make sure hard-working people don’t get taken advantage of during a stressful situation.”

Thank you to Greater Twin Cities United Way for this story. GTCUW attacks poverty in the Twin Cities through 10 measurable goals across three focus areas: Basic Needs, Health and Education. One goal is increasing the income of hardworking families in our community.

This week, we’ll cover three situations where requesting an extension is a good idea.

Situation #1: Your tax situation got more complicated than you thought

Life changes and so can your tax situation. Perhaps you got married last year or had a divorce. Or maybe you declared bankruptcy, foreclosed on a home, and so on.

Major life events like these could change how you file taxes, making it a good idea to file for an extension so that you have extra time to understand your tax situation.

If an extension on your return means the different between a correct and incorrect tax return, then request an extension.

Situation #2: Some of your tax documents are missing

In a perfect world, all of your tax documents would march straight into your designated tax return folder, making it easy to stay organized when doing your taxes.

Unfortunately, sometimes your tax documents can get lost or have a mistake. In cases where you need extra time to get your tax documents straightened out, requesting an extension can help.

Situation #3: Something else becomes more pressing than filing by April 15

Sometimes we try our best to file on time, but life can throw you a curve ball and suddenly you have to attend to a personal emergency.

In cases where your personal life has become overwhelming, requesting another six months to file can give you the flexibility to take care of things one step at a time.

However, if you decide to file for an extension, read on below to make sure you understand what you’re requesting from the IRS.

What everyone should know about filing after April 15

Although getting an extension is easy and usually automatic, make sure you understand that your duty to pay any owed taxes is not extended.

The purpose of getting an extension is to get extra time so you can submit a complete and accurate tax return to the IRS.

Essentially, if you do not pay the taxes you owe by April 15, 2013, you will owe an interest penalty for any unpaid federal and state taxes. You may also be charged a late payment.

To avoid these charges and penalties, you should make an estimated payment of taxes owed to the IRS and to the Minnesota Department of Revenue.

You can find more information about making federal and state estimated tax payments on the IRS’s Form 1040-ES and the Minnesota Department of Revenue website.

So there you have it, three reasons to file now and three situations where getting an extension is a good idea. If you need to file for an extension, use Form 4868 or ask your tax preparer to file it for you.

If you have any tax related questions, send them our way via the contact form.

While there is an option to request an extension to file by October 15, 2013, here are three good reasons why you shouldn’t.

Reason #1: You pay interest on any owed taxes, even if you extend

If you owe taxes to the IRS and file for an extension, the IRS will still calculate interest on your outstanding balance.

That’s because a tax extension is meant to give you extra time to prepare a completely accurate tax return, but the IRS will not wait around to receive the taxes you owe.

To avoid these penalties and interest payments, it’s best to pay in full as soon as you can, preferably by April 15.

Reason #2: Filing as soon as possible protects you from identity theft

If you’re due a refund and extend, you won’t have to worry about any late payment interest or penalties. But waiting to claim your refund could expose you to a rapidly growing problem: identity theft.

According to the IRS, identity theft cases involving stolen Social Security numbers to collect other people’s tax refunds soared to 449,809 in 2012, up more than 80% from the previous year. Taxpayers usually don’t realize their identities have been stolen until they try to file and their return is rejected by the IRS.

Bottom line: The longer you wait to file, the more time identity thieves have to steal your refund.

Reason #3: Procrastinating can lead to more procrastination

It can be easy to push things off and say you’ll do it later, but you should avoid procrastinating on something as important as taxes. By avoiding filing your taxes you put yourself at risk of losing paperwork, paying late payment fees, or forgetting to do it at all.

In fact, each year the IRS has millions of unclaimed tax refunds that expire by April 15 and this year is no different. The IRS recently announced that they have $917 million dollars in unclaimed refunds for tax year 2009, and unless claimed by April 15, 2013, the money becomes property of the U.S. Treasury.

Still not sure if filing an extension is a good idea or not? Next week, we’ll share our thoughts on situations when filing an extension is recommended.

In the meantime, get your tax documents in line, and send us any questions via our contact form.

Without assistance from qualified tax preparers, refugees are prone to making mistakes that can trigger an audit or keep them from getting their full refund.

This year, the Minnesota Department of Revenue is hosting two free tax clinics at Karen Organization of Minnesota (KOM) to help refugees from Burma file their federal, state and property tax returns.

Paula Gizachew and Chue Yee of the Department of Revenue assisted 18 households during the first tax clinic held on February 22.

Paw Moo, who arrived in the United States in 2012, said she was very grateful to receive help since she did not feel confident filling out the tax forms by herself.

“In here, it feels safer because they help you with everything,” she said.

“It feels safer because they help you with everything.” – Paw Moo, free tax preparation customerShe was excited to learn she will receive a refund this year and said she plans to keep the money in savings “just in case.”

While all appointments at KOM’s tax clinics have been filled, refugees needing tax assistance are welcome to visit another site in the metro area. (Refugees who do not speak English should bring their own interpreter or find a tax site that provides interpreters.)

The Minnesota Department of Revenue operates several free tax clinics for low income people through a grant from the U.S. Department of the Treasury. Services are provided by staff and volunteers from the Department of Revenue at no cost to participants. To learn more about these free tax preparation sites, visit the Minnesota Department of Revenue’s website.

Thank you to the Karen Organization of Minnesota for providing this story. The Karen Organization of Minnesota’s mission is to enhance the quality of life for Karen and other refugees from Burma in Minnesota.

Mistake #1: You didn’t file taxes (because you didn’t need to)

The EITC can only be claimed by filing a tax return but some workers miss out because they don’t earn enough to be required to file taxes.

Let’s be clear, there’s a difference between when you need to file taxes and when you should file taxes.

As a general rule, anyone who had taxes taken out of their wages or could qualify for the EITC and other refundable credits should look into filing their taxes.

Mistake #2: You didn’t think you were eligible

For many people, they might miss out on the EITC because they weren’t eligible last year so they think they aren’t eligible this year.

However, if you had any changes to your family size, income, marital status, take another look. You just might be eligible this year.

Mistake #3: You previously claimed the EITC without being eligible

Never claim the EITC when you’re not supposed to! If the IRS finds that you fraudulently claimed the EITC, you cannot claim EITC for the next 10 years.

For those that hire someone to prepare your taxes, it’s important to have an honest tax preparer. If your tax preparer does anything on your tax return that seems like fraud, run – not walk – far, far away to a more honest one!

Mistake #4: You didn’t take disability rules into consideration

If you have, or your spouse or a child on your tax return has a disability, it could affect your eligibility for the EITC in a number of ways.

Disability Retirement Benefits

The IRS considers disability retirement benefits as earned income until you reach minimum retirement age. In contrast, Social Security Disability Insurance, SSI, or military disability pensions are not considered earned income.

Claiming a disabled child

If you are claiming a child with a disability, there is no age limit as long as the child meets the IRS definition of “permanently and totally disabled”:

• Not being able to engage in any substantial gainful activity because of a medically determinable physical or mental condition; and
• A physician must certify the condition has lasted or is expected to last continuously for at least 12 months or to result in death

Mistake #5: You didn’t claim dependents that you could have

Grandparents, uncles, aunts, foster parents, step-parents, and others taking care of children should take notice of who they can claim on their tax return.

For the EITC, the following children might be eligible to be claimed as a dependent:

• Your son, daughter, adopted child, stepchild, foster child (placed by court or an authorized placement agency) or a descendent of any of them such as your grandchild
• Brother, sister, half brother, half sister, step brother, step sister or a descendant of any of them such as a niece or nephew

However, make sure that you’re allowed to claim a child as your dependent. If you’re not sure, talk to a talk professional.

Make sure you aren’t making any of these tax mistakes that could cost you up to $5,891 this tax year!

If you need help with your taxes, consider using a free tax clinic where volunteers are trained to help you claim the EITC and other tax credits for you.

It might seem like common sense to claim your own child, but for some non-traditional families, the lines on who counts can get a bit blurry.

And that’s how some families can miss out on the EITC.

Who should watch out

Grandparents, uncles, aunts, foster parents, step-parents, and others taking care of children should take notice.

For the EITC, the following children might be eligible to be claimed as a dependent:

• Your son, daughter, adopted child, stepchild, foster child (placed by court or an authorized placement agency) or a descendent of any of them such as your grandchild
• Brother, sister, half brother, half sister, step brother, step sister or a descendant of any of them such as a niece or nephew

Secondly, any claimed child dependents for the EITC must meet the IRS’s definition of a qualifying child.

Because rules on claiming dependents on your tax return can be complicated, we always recommend talking to a tax professional if you’re ever unsure about if you can claim someone or not.

Additional information for non-traditional families can be found on the eitcoutreach.org site.

He was carrying a small baby.

He said, ” This little gal came in with her parents to have taxes filed. It is below zero outside today and she came in with no hat. There MUST be a baby hat here at Mahube that we can give her.”

“You do that kind of thing, right?”

As a Community Action Agency, Mahube-Otwa does very much do “that kind of thing.”

Since Mahube-Otwa is the host site for the RSVP program, we have lots of hats and mittens and blankets for residents who are in need.

So we fixed up the little baby girl with a new hat, baby mittens and a blanket. And her parents got their tax return e-filed along with all the tax credits for which they were eligible.

This very young new family learned how to dress their new baby properly for Minnesota winters as their taxes were prepared. They also were given the opportunity to enroll in Early Head Start.

This is what can happen when program silos get dismantled, and volunteers as well as staff members share in the community action mission.

Mahube-Otwa is a non-profit that serves the community in Mahnomen, Hubbard, Becker, Otter Tail and Wadena counties and also hosts free tax preparation services.

Special thanks to Karen Lenius, Senior Programs / RSVP Director at Mahube-Otwa for providing this story,

If you have, or your spouse or a child on your tax return has a disability, it could affect your eligibility for the EITC in a number of ways.

Disability payments

The IRS considers disability retirement benefits as earned income until you reach minimum retirement age.

In contrast, Social Security Disability Insurance, SSI, or military disability pensions are not considered earned income.

So depending on the kind of disability payment you receive, your income might be eligible to be calculated for the EITC.

Claiming a disabled child

Normally, you can only claim a child dependent for the EITC if s/he was younger than 19 (or under 24 if s/he’s a full-time student).

But if you are claiming a child with a disability, there is no age limit as long as the child meets the IRS definition of “permanently and totally disabled”:

• Not being able to engage in any substantial gainful activity because of a medically determinable physical or mental condition; and
• A physician must certify the condition has lasted or is expected to last continuously for at least 12 months or to result in death

Real-life example

We had a customer whose daughter was 33, and normally couldn’t be claimed as a dependent for the EITC.

However, her daughter was considered disabled under the IRS definition and the mother was able to claim her adult daughter for the EITC.

If you have questions about how disability can affect your tax return, learn more at the IRS website.

Never claim the EITC when you’re not supposed to!

If the IRS finds that you fraudulently claimed the EITC, you cannot claim EITC for the next 10 years.

For those that hire someone to prepare your taxes, it’s important to have an honest tax preparer. If your tax preparer does anything on your tax return that seems like fraud, run – not walk – far, far away to a more honest one!

What if I didn’t know I did a mistake?

Even if you don’t intend to commit tax fraud, you’re not off the hook for not understanding tax rules.

If IRS ever denies your EITC claim due to “reckless or intentional disregard of the EITC rules,” you will not be able to claim EITC for the next 2 years.

Get professional help for free

If you need help finding a honest, professional tax preparer, consider visiting a free tax preparation site in Minnesota. Most EITC eligible taxpayers are eligible to receive free tax help.

If you have questions, you can also contact us by our contact form or Facebook.

For many people, they might miss out on the EITC because they weren’t eligible last year so they think they aren’t eligible this year.

However, if you had any changes to your family size, income, marital status, take another look. You just might be eligible this year.

Taxpayers without children can still claim the EITC

One of the biggest misconceptions about the EITC is thinking it is only for people with children. That’s not necessarily true.

Although they get a smaller refund, single workers without children making less than $13,980 in 2012 can qualify for up to $475 from the EITC.

For married taxpayers without children, they can get the EITC as long as the household income is less than $19,190.

Moderate income taxpayers can claim the EITC, too

Another big misconception is that the EITC is only for low-income people. In reality, the EITC helps low- to middle-income workers.

As an example, if a married couple with two kids made $42,000 last year, they could get an estimated $1,082 from the EITC.

Remember, you can always check to see if you qualify under the 2012 EITC income and dependent guidelines. If you have questions, you can also contact us by our contact form or Facebook.