Low-income individuals have several options for obtaining assistance with their taxes. The majority of these programs are offered by the Internal Revenue Service (IRS), but some are the result of collaborations between the agency and other non-profit organizations.
Available Tax Help for Indigents
The IRS operates three programs to assist indigent individuals with completing their tax returns: IRS Free File, Volunteer Income Tax Assistance Program (VITA) and Tax Counseling for the Elderly (TCE). It also offers two programs to assist low-income individuals with resolving problems or disputes they have with the IRS.
IRS Free File
The IRS Free File system permits taxpayers earning less than $58,000 to complete and file their taxes online at no cost. The earnings limitation applies to single individuals and married taxpayers filing jointly. It only permits taxpayers to file a 1040 or 1040EZ.
The program provides both online software and electronic forms for completion. Forms are replicas of their paper counterparts, but are able to perform simple calculations. Tax software programs are offered through agreements between the IRS and private companies. These programs guide taxpayers thorough the applicable form to ensure they complete it properly. Regardless of the method used, the IRS permits qualifying taxpayers to file their returns online, also for free.
Although helpful, the Free File system requires that the taxpayer have some knowledge and understanding of their financial situation and taxes. Questions about what to include on a return or available credits and deductions may not be answered.
The IRS VITA Program
The VITA program provides individuals with incomes less than $49,000 with tax guidance and help completing tax forms. A staff of IRS-trained and approved volunteers operate the program throughout the nation, usually in libraries, shopping malls or schools.
Volunteers review a taxpayer's financial and personal information and discuss the best form to complete and any available deductions or credits. They usually also help complete the taxpayer's return and file it for them. There is no charge for this service. You can search for center locations online.
The IRS TCE Program
TCE is a tax-assistance program designed to help taxpayers over the age of 60 identify deductions or credits available to them, complete their tax forms and file their return. It is offered in conjunction with the American Association of Retired Persons (AARP). The AARP trains and staffs centers throughout the nation, but centers are only available during tax time. The AARP provides a list of centers in each state on its website.
The Low Income Taxpayer Clinic
This clinic is available to taxpayers who have a problem with the IRS. Assistance is provided by independent agents approved by the IRS, many of which are bilingual. These agents may charge a small fee for their services. Available services include representing the taxpayer in court, collection proceedings or during audits.
Eligibility for the program is dependent upon the taxpayer's income. Each state has different income limits based on the average earnings of their residents as determined by the Department of Health and Human Services. In general, a family of one individual can have an income of no more than $27,225, a family of two $36,775 and a family of three $65,425. The IRS publishes a list of income limits for each state and the center's contact information.
The Taxpayer Advocate Service
This service is available to taxpayers experience economic difficulties. The program assigns an independent advocate to a taxpayer to assist them with resolving any disputes they have with the IRS. A center operates in every state. Additional information about the service and contact information for centers are contained in Publication 1546 or by calling 1-877-777-4778.
Help with Paying Taxes
Indigent individuals can also obtain assistance if they are unable to pay their tax liabilities. Although there is no way to completely eliminate liability, they can establish a payment plan with the IRS or acquire additional time to make payments.
To establish an installment agreement with the IRS, a taxpayer must file Form 9465, titled "Installment Payment Request" or apply for one online. In general, the IRS only allows taxpayers owing a maximum of $25,000 and who are able to pay the entire amount they owe within five years to enter into an agreement. Online requests receive immediate approval or denial. Taxpayers are charged interest, the amount of which changes every three months.
The IRS grants 60-120 day extensions on payment to taxpayers who request through Form 1127 and who are able to prove their ability to pay within that period. The IRS must agree to the request, which can be submitted online. This option generally results in the taxpayer paying fewer penalties than if they did not pay or entered into an installment agreement.
Obtaining Help with Your Taxes
The IRS provides multiple types of tax help for indigent taxpayers. To avoid penalties and an exacerbation of any problems, seek assistance with your taxes, an extension of time or an installment agreement before the return or payment is due.