Volunteer tax preparation helps students learn the tax code and helps low-income families get what they are owed.
It started with a class assignment. To pass Bethel University's federal income taxation class, students must complete 24 hours of volunteer tax preparation work for low-income families. Needless to say, Rob Siml wasn't the only student at the Arden Hills private college dreading the requirement.
But on his first night, Siml helped a single mom of three fill out her return. She'd estimated a refund of $200. But Siml noticed, among other things, that she qualified for the Earned Income Tax Credit, making her refund jump by thousands of dollars. The provision represents an important form of federal tax relief, especially for single parents and low-income couples with qualifying children.
"She couldn't stop thanking me," said Siml, who that night realized how a large refund can help the working poor pay bills, buy a car, or save for the future. "I wasn't there just to fill out taxes. I was there to serve lower-income families," he said.
It's this type of remark that puts a beaming smile on the face of Bethel Prof. Leo Gabriel. A volunteer with AccountAbility Minnesota, Gabriel sends roughly 30 accounting students to volunteer at the tax assistance nonprofit's sites each year. The University of St. Thomas and other area college students also volunteer, as do students nationwide. The IRS estimates about 450 college students in this region volunteer to prepare tax returns.
Call it a win-win-win situation -- for accounting students in need of experience, for tax preparation sites in need of smart, dedicated volunteers, and for taxpayers, who rely on the affordable and accurate tax help.
Various nonprofit groups in partnership with the IRS run 12,000 free tax-preparation sites for low-income workers, the elderly and military members countrywide. Call 1-800-906-9887 to find a convenient site.
The sites serve a variety of taxpayers, but many qualify for the Earned Income Tax Credit (EITC). The EITC is a "refundable" tax credit, which means workers may receive a refund even if their income is so low they don't pay taxes.
Nearly half of all states also offer an anti-poverty tax credit; in Minnesota, it's called the Working Family Credit. The EITC put $43.7 billion in the pockets of more than 22.4 million working poor in 2006. In Minnesota, 265,148 taxpayers received nearly $455 million.
A family with two or more children earning in the $38,000 range could earn an EITC refund of as much as $4,716. A single person making around $13,000 might qualify for a refund of up to $428. Information on how to qualify, including specific income data, is available at www.irs.gov.
The IRS estimates that one in four eligible workers fails to claim the EITC; the free tax-prep sites hope to fix that -- and for good reason.
Gabriel's recent research found that the EITC helps 10 percent of poor families save for the future. "Although the indicators are slim, I think it's encouraging that during this time when we have a negative rate of savings in this country that there are indicators that this very-low-income population is saving," he said.
Using her skills to help families better their financial situation is one reason Bethel senior Erin Severson continues to volunteer at AccountAbility Minnesota even though she passed Gabriel's class in 2007.
On a recent Thursday night at the Broadway Community School in north Minneapolis, she prepared Crystal resident Audrey Carlson's tax return, answered the 23-year-old's questions about whether she's still a dependent and helped a newer volunteer.
"Knowing how to do taxes -- I think we have a responsibility then to use that skill to help people that definitely can use their refund to better their life," said Severson. "A lot of people don't know anything about filling out tax returns so they get taken advantage of a lot," she explained, citing examples of botched returns prepared for a high price, or fraudulent returns that have gotten taxpayers in trouble with the IRS.
She remembers some clients long after she's helped them -- such as the New Orleans family displaced by Hurricane Katrina or the guy who brought her mints. Chances are, they remember Severson, too. Or at least the refund they might never have seen if not for her.
Kara McGuire writes about money. Send questions or ideas to firstname.lastname@example.org or call 612-673-7293.