PROGRAMS

VITA Tax Resources

V.I.T.A

Volunteer Income Tax Assistance

​Attention Tax Payers!

What is VITA?

VITA stands for Volunteer Income Tax Program.  It is an IRS program started over 50 years ago.  The IRS and Urban League are partners and together they offer this free tax program to help to low-and middle-income taxpayers who make $58,000 or less.

 

Note: If you make over $58,000, Urban League’s VITA program can prepare your return if your tax return is within VITA’’s scope guidelines.

 

Who prepares the taxes for VITA?

IRS Certified Volunteers:  The IRS Certified Volunteers are also a reliable and trusted source for preparing tax returns. All VITA volunteers who prepare returns must take and pass tax law training that meets or exceeds IRS standards. This training includes maintaining the privacy and confidentiality of all taxpayer information. In addition to requiring volunteers to certify their knowledge of the tax laws, the IRS requires a quality review check for every return prepared at a VITA site prior to filing.

What should taxpayers “Bring to Your Local VITA site”?

  • Proof of identification (photo ID)

  • Social Security cards for you, your spouse, and dependents 

  • An Individual Taxpayer Identification Number (ITIN) assignment letter may be substituted for you, your spouse, and your dependents if you do not have a Social Security number

  • Birth dates for you, your spouse, and dependents on the tax return

  • IRS Notice 1444 – IRS notice 1444 is the form that shows the amount of the recipient's Economic Impact Payment (EIP) (stimulus check) and will be mailed to every EIP recipient's last known addresses. Please do not be alarmed that you are receiving a notice from the IRS. The IRS notice 1444 information will be needed for your 2020 tax return. It is especially important for people to keep this notice if they think their payment amount is wrong. When they file their 2020 tax return, they can refer to Notice 1444 and claim additional credits if they are eligible for them.

  • Wage and earning statements (Form W-2, W-2G, 1099-R, 1099-NEC) from all employers.

  • Interest and dividend statements from banks (Forms 1099)

  • Health Insurance Form (F1095-A) required if you had Marketplace Insurance.

  • Proof of bank account routing and account numbers for direct deposit or direct debit. (voided check or deposit slip)

  • Total paid for daycare provider and the daycare provider's tax identifying number such as their Social Security number or business Employer Identification Number

  • A copy of last year’s federal and state returns is required. To file taxes electronically on a married-filing-joint tax return, both spouses must be present to sign the required forms.

 

What type of returns do VITA prepare?

Wages, salaries, etc. (Form W-2)

Interest Income (Form 1099-INT)

Dividends Received (Form 1099-DIV)

State Tax Refunds (Form 1099-G)

Unemployment Benefits (Form 1099-G)

IRA Distributions (Form 1099-R)

Pension Income (Forms 1099-R, RRB-1099, CSA-1099)

Social Security Benefits (Form SSA-1099) (RRB-1099)

Simple Capital Gain/Loss (Form 1099-B) limited

Sale of Home (Form 1099-S) limited

Self-employed Income (Form 1099-NEC) limited

Gambling Winnings (Form W-2G)

Cancellation of Debt (Form 1099-C) limited

Health Savings Accounts (Form 1099-SA) limited

Itemized Deductions limited

Education Credits (Form 1098-T)

Child Tax Credit

Earned Income Credit

Health Insurance Statement (Form 1095-A)

Prior Year and Amended Returns limited

 

What type of returns are out-of- scope for VITA?

Schedule C with loss, depreciation, or business use of home

Complicated Schedule D (capital gains and losses)

Form SS-5 (request for Social Security Number)

Form 8606 (non-deductible IRA)

Form 8814 (child taxed at parent’s tax rate)

Form SS-8 (determination of worker status for purposes of federal employment taxes and income tax withholding)

Parts 4 & 5 of Form 8962 (Premium Tax Credits)

Rental Income (Schedule E)

File your own free taxes here!

Tax Planning Strategies: Tips, Steps, and Resources for Planning

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Get a head start on your 2021 taxes!  Are you holding out enough federal withholding out of your paycheck?

IRS Withholding Calculator - paycheck checker:

Make sure you are withholding enough federal taxes from your paycheck.  If not, check with your HR department and review your W4.  Since federal taxes operate on a pay-as-you-go basis, you need to pay most of your tax during the year as you earn income. It is a good idea to make sure you are not having too little tax withheld, which could lead to a smaller than expected refund or even a tax bill. You may also want to ensure you are not having too much tax withheld, if having that extra money in each paycheck is more helpful than getting a larger refund when you file.

https://apps.irs.gov/app/tax-withholding-estimator

Are you collecting Unemployment?  What you need to know!

Unemployment is taxable income.  It is unearned income and does not count toward Earned Income Credit. Withholding taxes from unemployment is voluntary: You can either have taxes withheld from your benefit payments like you would a regular paycheck, pay when you file your taxes or pay a quarterly estimated tax.

At the federal level, unemployment benefits are treated the same as other types of ordinary income. The federal income tax brackets, which range from 10% to 37%, will determine how much you pay. 

 

Which bracket you fall into depends on your total income minus deductions and credits, with the rate you will pay being determined on a per-dollar basis—you will not pay the same rate for every dollar you made during the year.

2020 tax brackets (for taxes due April 15,2021)

Source: IRS

My Free Taxes Link:

https://www.myfreetaxes.com/

Complete your paperwork before going to your appointment at the VITA sites!

 

English:

Form 13614-C (Rev. 10-2021) (irs.gov)

 

Spanish:

Form 13614-C (SP) (Rev. 10-2021) (irs.gov)

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Taxpayers can call the United Way at 211 to be referred to the nearest VITA location.  Or you can call 423-265-8000, if you cannot get through at 211.  Additionally, you can text your zip code to 211-898 to start a texting chat. 

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Due to COVID, Urban League of Greater Chattanooga's VITA Program will be doing the "Drop-off" only. See VITA listings for more information. With all the tax law changes, it is important that taxpayers bring their 2019 tax return to the VITA site.

 

Taxpayers are asking: “Is the stimulus check taxable?”

No! The stimulus checks (Economic Impact Payment - EIP) are not taxable, and it is not included in taxable income.  The stimulus checks are advance payment of a tax credit. And tax credits are not taxable income.  The IRS will not take your stimulus check for back taxes, but it will take your check if you owe “child support”.

The first Stimulus checks were based on information from either your 2018 or 2019 tax return.  The second stimulus checks were based only on your 2019 tax returns, so, if you were eligible and did not receive your stimulus checks (Economic Impact Payment- EIP) both the first ($1,200) and second ($600) or perhaps you only received part of the money (example: you had a baby in 2020), you may be able to get the difference when you file your 2020 tax return by completing the Recovery Rebate Credit questionnaire.  If the credit is higher than the combined stimulus checks, you will get the difference back on your 2020 tax return in the form of a larger tax refund or a lower tax bill.  If the combined stimulus checks are higher than the allowed credit, you get to keep the difference.

The taxpayer will be asked questions regarding the stimulus checks:  how much money they received for the first stimulus check and the second one.   So, it is especially important for taxpayers to know how much stimulus checks they received. The IRS will send out a letter labeled: Notice 1444 to all recipients who have received an Economic Impact Payment (stimulus check).  They will mail this notice to every EIP recipient’s last known address and it will show the amount they received.  The IRS notice 1444 information will be needed for your 2020 tax return; make sure you bring it to the VITA tax site.  Or printout from their checking account to show the amount they received.

It is so important for everyone, even those who do not have a filing requirement, to file their 2020 taxes.

Everyone will be asked to file a 2020 federal tax return and enter the amount of their Economic Impact Payment (stimulus check) they received.  This is just to make sure you received the correct amount.

For those who did not receive their stimulus checks (first one or the second one) or are due more money, they will need to file a 2020 federal income tax return to claim the Recovery Rebate Credit (stimulus check) if they did not get the money or received less money than they are eligible to get, such as if a child's stimulus were not included in the payout

The IRS will send out Notice 1444 to all taxpayers who received a stimulus check.  IRS notice 1444 is the form that shows the amount of the recipient's Economic Impact Payment (EIP) and will be mailed to every EIP recipient's last known addresses. Please do not be alarmed that you are receiving a notice from the IRS.

 

What is new for "2021" Tax Season?

  • Charitable deduction changes. New this year, taxpayers who do not itemize deductions may take a charitable deduction of up to $300 for cash contributions made in 2020 to qualifying organizations per return. This provision applies to tax year 2020.

 

  • Standard Deduction: The standard deduction is a specific dollar amount that reduces your taxable income. In 2020 the standard deduction is:

    • $12,400 for single filers and married filing separately,

    • $24,800 for married filing jointly and

    • $18,650 for head of household

 

People over age 65 or who are blind get a bigger standard deduction.

What is a tax deduction?

A tax deduction lowers your taxable income and thus reduces your tax liability. You subtract the amount of the tax deduction from your income, making your taxable income lower. The lower your taxable income, the lower your tax bill.

 

There are two tax deductions: You can either take the standard deduction or itemize on your tax return — you cannot do both. Itemized deductions are basically expenses allowed by the IRS that can decrease your taxable income. Even if you have no other qualifying deductions or tax credits, the IRS lets you take the standard deduction on a no-questions-asked basis. The standard deduction reduces the amount of income you must pay taxes on.

 

  • Required minimum distributions (RMDs)

    • The required minimum distribution (RMD) age increased from 70 ½ to 72 for taxpayers turning 70 ½ after December 31, 2019.

    • For those who were age 70½ or younger on Jan. 1, 2020, their first RMD is not due until April 1 of the year after they turn age 72.

 

​New forms:

  • Form 1040, U.S. Individual Income Tax Return, has additional lines to accommodate charitable contributions, federal income tax withholding from Form W-2, Form 1099, and other forms, and the recovery rebate credit.

 

  • New Form 1099-NEC, Nonemployee Compensation, the PATH Act accelerated the due date for submission of Forms 1099 that include nonemployee compensation (NEC). To alleviate taxpayer burden and eliminate confusion regarding due dates, new Form 1099-NEC was created. As a result, nonemployee compensation (formerly Box 7) has been deleted from Form 1099-MISC and will now be reported on the new Form 1099-NEC.

 

  • Form 1040, Schedule SE, Self-Employment Tax will no longer contain the “short” version (Section A). All filers of Schedule SE will use the method of calculating self-employment tax found in Section B. As a result, Schedule SE will also no longer allow joint return filers to use a single Schedule SE (one using Section A and one using Section B). Each taxpayer with taxable net self-employment earnings will use a separate Schedule SE.

What is changing with popular tax credits in 2021?

Tax credits reduce your tax bill dollar-for-dollar, making them more valuable than deductions. Some of the most popular credits include the earned income tax credit, the child tax credit, the saver's credit, and two educational tax credits.

 

Earned Income Credit (EIC or EITC)

The Earned Income Credit is a refundable tax credit and is a powerful tool for helping working families with lower wages. The amount you receive depends on your earned income. Higher earnings (up to a point) means higher EITC. Since the credit depends on earned income, many families may be at risk of losing all or some of the benefit because so many were laid off as economies in many states shut down.


COVID relief bill that was pass will be huge for many workers who have been unemployed or had reduced earrings in 2020. Special temporary rule allowing lower-income individuals to use their earned income from tax year 2019 to determine the Earned Income Tax Credit and the refundable portion of the Child Tax Credit (i.e., the Additional Child Tax Credit) in the 2020 tax year. This will help workers who experienced lower wages this year, due to the pandemic, to get a larger refund that is consistent with their earnings from prior filing seasons.

 

A special thing about the earned income tax credit is that even if you do not owe anything in taxes, you can still get the credit amount back from the IRS in the form of a refund.  See chart below:

2020 Earned Income Tax Credit

(For taxes due in April 2021)

Child Tax Credit and Additional Child Tax Credit

Taxpayers can claim the Child Tax Credit if they have a qualifying child under the age of 17 and meet other qualifications. The qualifying child must have a valid Social Security number issued before the due date of the tax return, including extensions. For tax year 2020, this means April 15, 2021, or if a taxpayer gets a tax-filing extension, Oct. 15, 2021. The Child Tax Credit maximum amount per qualifying child is $2,000. It is a nonrefundable credit and reduces your tax liability. The Additional Child Tax Credit is a refundable credit.  A taxpayer can get up to $1,400 of that amount for each qualifying child. So, like the EITC, the Additional Child Tax Credit can give a taxpayer a refund even if they owe no tax.

 

Credit for Other Dependents:

This credit is $500 nonrefundable credit and is available for dependents who do not qualify for the $2,000 child tax credit, such as children who are age 17 and above, dependents with other relationships (such as elderly parents) or children who do not have a valid SSN.  The dependents must be a U.S. Citizen, U.S. national, or resident of the U.S.  The dependent must have a valid identification number (ATIN, ITN or SSN).

Child and Dependent Care Credit Expenses

The Child and Dependent Care Credit is a non-refundable tax credit offered to taxpayers who pay out-of-pocket expenses for childcare. The credit offers relief to individuals and spouses who pay for the care of a qualifying child or a disabled dependent while they work or look for work.

A tax filer may be able to claim the child and dependent care credit if they paid someone to care for a child under the age of 13. One can also qualify if they paid for the care of a spouse or other dependent adult so long as that individual is not capable of self-care and lived in the taxpayer’s home at least half the year.

In addition to daycare, tax filers can also claim other expenses, such as babysitters, day camps and before- and after-school programs.

While there is no income restriction on claiming the credit, those with lower income levels can claim a higher percentage of eligible expenses.

The percentage of eligible expenses that qualify for the tax credit varies depending on the taxpayer’s income level, and there is a limit on the total dollar amount of expenses that qualify as well.

Saver’s Credit

The saver's tax credit pays as much as $1,000 per person to encourage retirement contributions. It is designed for low- to middle-income taxpayers. Depending on your income, you can get a credit for 10%, 20%, or 50% of up to $2,000 in contributions to an IRA, 401(k), or similar retirement account.

Disclaimer:  The information contained within this website is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from an accountant or other tax professional. The contents below are based on information currently available and may be subject to change.

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