Four Things for Latino Families to Remember on Tax Day

By Yuqi Wang, Policy Analyst, Economic Policy Project, NCLR

For many Latino households, the tax refunds they receive every April is one of the largest influxes of cash they receive all year. The refunds help families pay debts, keep them out of poverty, and help to buy necessities like clothes and groceries. Below are a few things for Latino families to keep in mind as the 2016 tax filing season wraps up today.

1. You may be eligible for critical refunds, such as the EITC or CTC. Filing your taxes means that you might be eligible for critical refunds like the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). The EITC and the CTC are two refundable tax credits that benefit low- and middle-income earners. They increase the earnings of lower-income workers, reduce child poverty, make low-wage work more rewarding, and offset the effect of paying regressive payroll taxes. Both credits raised more than nine million Americans out of poverty in 2015, and made 22 million others less poor. It is important to note that taxpayers filing with an ITIN number are eligible to claim the CTC, but not the EITC.

2. If you file your tax return with an ITIN, you may need to renew your ITIN to get a refund. Under legislation passed by Congress in 2015, the IRS requires that certain taxpayers renew their ITINs before they submit their tax return and claim certain tax credits, primarily the Child Tax Credit. Affected ITINs expired on January 1, 2017, and unless renewed, taxpayers using expired ITINs on their tax returns will face a delay in receiving eligible tax refunds. For more information and resources on renewing ITINs, visit nclr.us/ITIN.

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ITIN Users Should Prepare for Revalidation Process

At the end of last year, Congress enacted legislation that requires some immigrants filing their taxes with an Individual Taxpayer Identification Number (ITIN) to revalidate. NCLR has made resources available to the community that includes the deadlines for ITIN filers to renew:

ITIN Revalidation Deadlines

While taxpayers with ITINs issued before 2008 will have to revalidate in the next year (by January 1, 2017), the Internal Revenue Service (IRS) has not shared details on that process and questions remain. For example:

  • Will immigrants who revalidate keep their same ITIN or receive a new number?
  • Will revalidation follow the same process as applying for a new ITIN or will there be a streamlined application?
  • Do immigrants revalidating their ITIN have to do so at the same time as filing a tax return or can it be filed separately to the IRS?

As we await answers to these questions and more, the IRS has stated publicly that taxpayers with ITINs that need to be revalidated should not do so with this year’s tax return. More information will be available in the coming weeks about how and when ITIN holders facing deadlines beginning on January 1, 2017 should proceed.

Until then, tax preparers should use this tax season to inform affected clients that they will need to prepare documents to revalidate shortly, but emphasize that a process is not yet in place.

Visit the nclr.org for additional resources.

Don’t Leave Money on the Table! Access Your Education Tax Benefits.

By Brenda Calderon, Education Policy Analyst, NCLR

IRSLogoA 2012 report by the Government Accountability Office found that nearly 14 percent of all tax filers failed to claim a credit for which they were eligible. Tax credits help us afford higher education expenses by reducing the amount of income tax we have to pay or by issuing a refund. Unfortunately, millions of students and their families are unaware or don’t apply for the correct tax benefits, leaving much-needed dollars on the table—an average of $466 for each qualified filer!

Are you one of them?

Recently, NCLR joined Rep. Danny Davis (D–Ill.) and others on a campaign to get more people to apply for their education tax benefits. The #TaxBreaks4Students campaign encourages eligible students and families to apply for tax credits.

While eligibility criteria vary for each credit, there are a number of options available for students and families. The two largest tax credits available are the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC), although there are many others.

GraduationAmerican Opportunity Tax Credit

The AOTC can be claimed for the first four years of post-secondary education if a student is enrolled at least part time in courses. The maximum tax credit for AOTC is $2,500, and up to $1,000 is available as a refund if you owe no taxes. If you are a current graduate student, you are not eligible for AOTC; however, you may be eligible for the Lifetime Learning Credit.

Lifetime Learning Credit

The LLC provides up to $2,000 per year for a student enrolled at least part time. Unlike the AOTC, the LLC has no limit on the number of years it can be claimed, meaning it is available to graduate students and those in continuing education programs. However, if the credit is greater than the total amount owed in taxes, it will not be issued as a refund.

How do I claim these credits?

The IRS provides an interactive guide to help you determine whether you qualify for a tax credit. Only students who attend schools participating in federal student aid programs can qualify for the AOTC. Once you confirm eligibility, the IRS provides Form 8863 to help you calculate the education tax credit. Most education institutions will mail you Form 1098T, which provides this information for you.

To learn more about income thresholds for the AOTC and the LLC, visit the IRS website.

Remember, the deadline to file your taxes is April 15!

Will the Housing Market Be a Casualty of the Government Shutdown?

Photo: Jeffrey Turner

Photo: Jeffrey Turner

What’s one way to sabotage the already struggling housing market recovery that millions of Americans desperately need?  Why, a government shutdown, of course.

As we head into the second week of the government shutdown, little progress has been made beyond pointless offers to fund specific programs with piecemeal bills. Realistically, this strategy amounts to political posturing and saving face for a group of lawmakers that continue to obstruct progress—with it, we are no closer to finding a solution.  Continue reading