March 2020

[fusion_builder_container hundred_percent=”no” hundred_percent_height=”no” hundred_percent_height_scroll=”no” hundred_percent_height_center_content=”yes” equal_height_columns=”no” menu_anchor=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” status=”published” publish_date=”” class=”” id=”” link_color=”” link_hover_color=”” border_size=”” border_color=”” border_style=”solid” margin_top=”” margin_bottom=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_position=”center center” background_repeat=”no-repeat” fade=”no” background_parallax=”none” enable_mobile=”no” parallax_speed=”0.3″ background_blend_mode=”none” video_mp4=”” video_webm=”” video_ogv=”” video_url=”” video_aspect_ratio=”16:9″ video_loop=”yes” video_mute=”yes” video_preview_image=”” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″][fusion_builder_row][fusion_builder_column type=”1_1″ layout=”1_1″ spacing=”” center_content=”no” link=”” target=”_self” min_height=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” hover_type=”none” border_size=”0″ border_color=”” border_style=”solid” border_position=”all” border_radius=”” box_shadow=”no” dimension_box_shadow=”” box_shadow_blur=”0″ box_shadow_spread=”0″ box_shadow_color=”” box_shadow_style=”” padding_top=”” padding_right=”” padding_bottom=”” padding_left=”” margin_top=”” margin_bottom=”” background_type=”single” gradient_start_color=”” gradient_end_color=”” gradient_start_position=”0″ gradient_end_position=”100″ gradient_type=”linear” radial_direction=”center center” linear_angle=”180″ background_color=”” background_image=”” background_image_id=”” background_position=”left top” background_repeat=”no-repeat” background_blend_mode=”none” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” filter_type=”regular” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″ last=”no”][fusion_imageframe image_id=”3631|full” max_width=”” style_type=”bottomshadow” blur=”” stylecolor=”” hover_type=”none” bordersize=”” bordercolor=”” borderradius=”” align=”none” lightbox=”no” gallery_id=”” lightbox_image=”” lightbox_image_id=”” alt=”” link=”” linktarget=”_self” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”fade” animation_direction=”left” animation_speed=”0.3″ animation_offset=”” filter_hue=”0″ filter_saturation=”100″ filter_brightness=”100″ filter_contrast=”100″ filter_invert=”0″ filter_sepia=”0″ filter_opacity=”100″ filter_blur=”0″ filter_hue_hover=”0″ filter_saturation_hover=”100″ filter_brightness_hover=”100″ filter_contrast_hover=”100″ filter_invert_hover=”0″ filter_sepia_hover=”0″ filter_opacity_hover=”100″ filter_blur_hover=”0″]https://cwfphilly.org/wp-content/uploads/2020/03/amending-your-return.jpg[/fusion_imageframe][fusion_text columns=”” column_min_width=”” column_spacing=”” rule_style=”default” rule_size=”” rule_color=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” animation_type=”” animation_direction=”left” animation_speed=”0.3″ animation_offset=””]

What do you do if you discover a mistake on your tax return?
First…don’t panic! You can file an amendment. But before you do, there are a few things to know.

1 – The IRS (Internal Revenue Service) may fix the mistake for you.

Most of the time, you’ll want to fix your own mistakes. But sometimes, it might make sense to let the IRS do it. They will correct math errors and may even take it a step farther and make sure it’s reflected everywhere. In some cases, the agency may apply that estimated payment you forgot you made. These are the sorts of relatively harmless errors that you can happily let the IRS correct for you. If the IRS does correct a mistake, you’ll receive a letter explaining the adjustment and advising what steps, if any, you need to take.

2 – You can fix most mistakes by filing an amended return.

If the IRS doesn’t correct your mistake—or if it’s a huge mistake or you forgot to report something major and important (like being married)—you need to fix the mistakes. You do this by amending your previously filed tax return with a federal form 1040X, Amended U.S. Individual Income Tax Return. You can use IRS Form 1040X to correct a previously filed form 1040, form 1040A, form 1040EZ, form 1040NR, form 1040NR-EZ, or to change amounts previously adjusted by the IRS.

3 – Carefully follow the instructions.

Form 1040X is short (just two pages long), but it can be confusing if the instructions are not followed correctly. Form 1040X is the only tax form you need to use to correct your mistakes. You don’t need to file another form 1040, or other 1040 series form, because the front page of the amended return is an abbreviated version of form 1040.

4 – You’ll need a copy of your previously filed return.

To file an amended tax return, column A on Form 1040X will ask you to briefly summarize the items on your tax return as they were originally reported. 

Column B is where you will indicate any adjustments for income, deductions, liabilities, and payments. 

In Column C, list the correct amounts as they should have appeared on the original tax return.

Note: Column A + Column B = Column C. (A + B = C)

5 – Keep in mind that changes to one item may change more than just that item. 

For example, if your adjusted gross income (AGI) changes, items that use your AGI may also change (such items include certain itemized deductions, tax credits, and a taxable amount of Social Security benefits). This is also true for changing your filing status.

6 – Even if a tax break has disappeared, it doesn’t mean that you can’t claim it on an amended return. 

A lot of tax items were changed with The Tax Cuts and Jobs Acts (TCJA), however, as long as those tax breaks were available for the tax year you are amending, you can still claim the item. For example, at Part I, at the top of the second page, you could still make adjustments to personal exemptions and dependents for prior years (such as 2017) even though personal exemptions didn’t apply for the 2018 tax year.

7 – Let the IRS know your story. 

Use the space at Part III on the second page to explain why you are filing the amended return. It’s not meant to be a confession or an appeal, so keep it clear, concise and brief. Examples might include “I missed reporting this income because I received my 1099 late” or “I forgot to claim the child tax credit.” That’s all you need to say.

8 – Is there an online option for amended returns?

Unfortunately, you will need to go old school and print Form 1040X, complete all the information, then mail it. 

9 – Attach the right documents—but don’t include papers that aren’t needed. 

You must attach copies of any forms or schedules affected by the change, including any W-2 or 1099 forms (the normal rules apply here), or specific schedules that you didn’t attach previously. Don’t confuse the IRS by adding other forms or papers that don’t apply. In the instructions, they specifically request that you “not attach items unless required to do so.”

10 – Include payment if you owe money due to the amended form. 

If your amended return reflects a balance due, include payment with your return. If you can’t pay the full balance, make payment arrangements with the IRS, but remember that there may be penalties and interest due. 

11 – You may be owed a refund. 

If you are owed a refund, you can choose to apply it to the next year’s return or have a refund check mailed to you. To claim a refund, you typically must file your Form 1040X within three years after the date you filed your original return or within two years after the date you paid the tax, whichever is later. The normal statute of limitations still apply, so filing an amended return does not extend the statute of limitations or give you extra time to pay. If you file after the statute of limitations has run, you may be out of luck. 

The Bottom Line

Taxes are confusing enough. Understanding the process for amending a tax return can be even more puzzling for most people. If you’re a working family or individual in Southeastern Pennsylvania or Southern New Jersey, let our professional experts walk you through the process for free.

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We all know one thing in life to be true—raising children is expensive.

According to the Department of Agriculture, the average American family will pay more than $250,000 raising a single child to the age of 18. And that’s not counting college tuition! That can make life as a single parent even more stressful. 

The good news: at tax time, being a parent comes with perks. There are a few tax credits that can significantly lower the amount of taxes you have to pay that put money back in your wallet, which can make a big difference to your bottom line. The flip side of the good news is that getting those tax credits can be complicated. If you’re a qualifying working family or individual in Southeastern Pennsylvania and Southern New Jersey, you can get free, professional expertise from Campaign for Working Families to help you sort it out. 

So, what benefits can you claim as a single parent?

Head of Household

The head of household status has many tax benefits, including a higher standard deduction amount. Filing as head of household also reduces a single parent’s taxable income. For tax year 2019, taxpayers who use the head of household filing status may receive an $18,000 annual standard deduction. In comparison, a single filer is only entitled to a $12,000 standard deduction.

 To qualify as head of household, you must:

• Pay more than 50% of your household’s expenses
• Be unmarried on the last day of the tax year
• Have your child(ren) live with you for more than six months of the year, not including the time spent at school

A single parent who has more than 50% custody gets to claim head of household. The other parent, who has less than 50% custody, cannot file as head of household.

Child Tax Credit

Single filers and heads of household who make less than $200,000 a year may be eligible for the child tax credit. For the parent to qualify for the child tax credit, the child must have been under 17 years old at the end of the tax year. The child’s residence and citizenship must also be a U.S. citizen, a U.S. national, or a U.S. resident alien.

Claiming the child tax credit can decrease your taxes by $2,000 per qualifying child, which could equal a premium tax break for single parents who have many qualifying children. When the credit is more than the parent’s tax liability, the parent might receive the extra amount as a tax refund.

Usually, the parent with custody is the one claiming children on taxes, but there are exceptions. For example, if a child spends most of their time at one parent’s home, even if it’s not in the custody agreement, Internal Revenue Service (IRS) rules might allow that parent to claim the child tax credit.

Learn more about the child tax credit here.

The Child and Dependent Care Credit

The child and dependent tax care credit has no income limit. However, the amount of credit decreases with your income, according to the IRS. They wrote that your credit will range between 20 and 35% of your allowable expenses, so higher income earners will see less of a credit than lower income earners, but it will never go away entirely. 

The amount credited is $3,000 for a child or dependent, and $6,000 for two or more dependents. Because it’s a non-refundable credit and not a deduction or refundable credit, it can bring your tax bill to zero, but you will not receive a refund on any potential overage of these benefits, whereas the child tax credit is a refundable credit worth $2,000 per child, $1,400 of which is refundable. There are a ton of rules on the dependent care tax credit, which make it really hard to attain. 

Child Support and Alimony

As of 2019, neither child support nor alimony payments count as income. And, the person paying alimony may no longer deduct it from their taxable income.

Determine Your Eligibility for EITC (Earned Income Tax Credit)

Some single custodial parents qualify for EITC. Those with earned income below certain levels who file as single or as head of household can earn credits ranging from $3,461 for one qualifying child to $6,431 for three or more qualifying children.

As a Parent, How Do I Navigate Tax Time Benefits?

Get free detailed information and help from one of our professional tax experts.

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What Are Taxes and Why Do I Have to Pay Them?

One simple fact: Everyone has to pay taxes.

Trying to skip paying taxes or hiding money doesn’t really end well (just Google celebrity tax evasion). Also, 96 percent of Americans believe it’s their  civic duty to pay taxes, so the best thing to do is get a basic understanding of taxes so that you can pay them accurately and on time without panicking or getting depressed.  

Taxes are contributions made to the city, town, and state you live in, and—most notably—to the federal government. That money is used to pay for things society as a whole needs and uses, but that people can’t pay for individually—things like roads, salaries for police and firefighters, and salaries of elected officials (and, no, it doesn’t matter if you don’t like them or don’t think they’re doing a good job…they were elected and need to be paid).  

Why Understanding Taxes Is Important

Understanding your taxes could save you money! You might be surprised to know that research has shown that Americans overpay the government by $945 million every year. Divided evenly, that’s about $400 in overpayment per household. Most people can think of several ways they would rather use that $400, and if you understand how taxes work you can avoid giving too much to Uncle Sam.

Understanding taxes will also save you at work. At your job, understanding how taxes work can help you save hundreds by using pre-tax options on things like transportation and child care costs. In just 10 minutes, you can complete our online Benefits Launch application to see if you’re eligible for tax savings. 

Understanding your taxes might also help you budget better. You’ll be able to more accurately plan your monthly and yearly spending if you understand how much you’ll be paying. No one likes to be hit in the face on April 15 with a surprise tax bill, and a little know-how can go a long way to get ahead of the game. 

The W-4 Form and the Myth of the Big Refund.

One of the first things you do when you start a job is to fill out a W-4 form (if you’re self-employed this doesn’t apply). The W-4 form collects information called your personal allowances. For example, you will indicate whether you are married or single, have children or other dependents with childcare expenses, and answer if your spouse works. The number of allowances listed on the W-4 form determines how much income tax your employer will withhold from each paycheck.

Why does your company do this? All employers are required by law to set aside income tax from your paycheck and deposit the money in a Federal Reserve Bank. This makes it possible for the federal government to maintain a steady source of income while also drawing interest on your tax dollars. Instead of paying taxes in a huge lump sum once a year in April, you pay them all year long, paycheck to paycheck.

The W-4 form is important because it ensures that you aren’t paying too much or too little in federal income tax throughout the year. Most people look forward to a big refund check when they file their tax return in April, but what that really means is that they paid too much income tax during the year and let the IRS keep their money. Unlike a bank, the IRS does not pay interest on the money you let them borrow. They could have put that money in the bank for you, invested it to earn extra, or bought something useful with it. 

By adjusting the number of allowances on the W-4 form, you can decrease or increase the amount withheld from each check. That way, there are no big checks or big bills in April. Check your W-4 annually to make sure the information is up to date.

Most of us are clueless about taxes. Leave it to the experts to make sure you do your taxes the right way and don’t pay too much or make a mistake that could cost you money. 

In Summary: Taxes Can Be Confusing and Complicated. But CWF is here to help!

Let’s be honest, does anyone (other than an account) really understand taxes?

For most of us, taxes seem even more complex than rocket science. And truth be told, we don’t understand what that is either unless we’re rocket scientists!

Remember that exciting moment when you got your first paycheck from your first job? In your mind, you probably had big plans for your money already. Then you tore open that paycheck only to discover that a big chunk of what you thought you made was gone. What you didn’t prepare for was the money that would be taken out of your check for taxes. 

Preparing your taxes can be confusing and complicated, but qualifying working families and individuals in Southeastern Pennsylvania and Southern New Jersey can get free, professional help.

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