Low Income Taxpayer Clinic
Legal Aid’s tax lawyers can help you with federal income tax problems. These problems can include disputes about whether you qualify for the Earned Income Tax Credit, whether you are responsible for your spouse’s tax debts, and how to settle your tax debts.
Legal Aid does not prepare and file tax returns. We can refer you to organizations that can prepare returns without charging you any fees or costs.
When you contact Legal Aid, please be sure to have all of the following documents available. You may be asked to fax or mail copies to us:
- Your current income, including pay stubs
- Your Social Security number
- Any tax bills, letters or notices from the IRS
- Any letters or notices from the U.S. Tax Court
- Any letters you have written to the IRS
- Copies of the tax return(s) you filed for the year(s) in question
The Earned Income Tax Credit is a special credit for some working people. It can mean a tax refund to you or a reduction in the income tax you pay.
See Legal Aid’s Earned Income Tax Credit Brochure for more details.
When you sign a tax return with your spouse, both of you are responsible for any tax debt resulting from that tax return. That means you could be responsible for the whole tax debt even if you did not earn any money that year or if the debt is your spouse’s fault. You may qualify for innocent spouse relief which means you may not have to pay all or part of that tax debt.
If you don’t think you owe the tax debt because your tax return was correct, you can ask the IRS to review your tax return again. This is called an “Audit Reconsideration.” Ask the IRS to review your case by submitting new and relevant information to prove the items the IRS did not allow when it audited your tax return the first time.
- Make monthly payments through an “Installment Agreement.”
- Ask to be placed in “Currently Not Collectible” status because you face a financial hardship. Currently Not Collectible status means the IRS will not collect on the debt, except to take your future tax refunds and apply them to this debt, but the debt still exists.
- Offer to settle the debt by paying part of the tax. This is called an “Offer In Compromise,” and is based on your financial condition.
The Legal Aid Society of Cleveland’s Low-Income Taxpayer Clinic (LITC) helps low-income people who have a problem with the Internal Revenue Service. Cleveland’s Legal Aid is one of 150 LITC’s across the United States, funded to provide representation before the IRS or in court on audits, tax collection disputes, and other issues. Cleveland Legal Aid’s LITC has a special focus on helping individuals with limited English proficiency.
Low-Income Taxpayer Clinics – including Cleveland Legal Aid’s – are not part of the IRS but they receive partial funding from the IRS via the LITC grant program.
Cleveland Legal Aid’s LITC is led by senior attorney Susan Morgenstern, who is nationally recognized for her advocacy on behalf of low-income taxpayers. Numerous other Legal Aid attorneys and pro bono volunteers handle tax cases. An example of a recent success story is that of Lorain resident and adoptive mother of two special needs children, Erin Smith.*
Legal Aid attorney Davida Dodson represented her in a divorce. In the divorce decree, custody of the children was split, but Ms. Smith had one extra day of custody with her children. That one extra day made Ms. Smith the primary caregiver, and hence Ms. Smith qualified for the Earned Income Tax Credit (“EITC”). Having the ability to claim the EITC on her tax return meant additional financial stability for Ms. Smith, and provided her funds to tend to the needs of her special needs children.
However, after filing her 2011 tax return, Ms. Smith was contacted by the IRS, asking for additional paperwork and assessing her penalties for claiming the EITC in error.
Legal Aid attorney Camille Gill, in consultation with Susan Morgenstern, determined that Ms. Smith was not required to go through the hassle of this additional paperwork. The careful wording in the divorce decree was sufficient to preserve Ms. Smith’s EITC credit. Ms. Gill argued such and the IRS corrected Ms. Smith”˜s account and refunded the penalties they had incorrectly charged her. Ms. Smith was credited nearly $2,400.
* client’s name changed to protect privacy
What is an H-2A worker? Close
H2A workers must receive a W-2 Wage and Tax Statement. They should not receive a1099. If an H-2A worker has filed taxes using a 1099, the employer should issue a corrected income statement on form W-2. For more information, please see http://www.irs.gov/Individuals/International-Taxpayers/Foreign-AgriculturalWorkers.
If an H2A worker filed a return with a 1099, he or she should contact the Legal Aid Society of Cleveland to get help amending their prior returns. The worker should call Legal Aid at 1-888-817-3777.
Yes. All H-2A workers are eligible for Social Security Numbers and should have one in order to file their taxes. To obtain a Social Security Number (SSN), the worker must complete Form SS-5 and take it to a Social Security Office with a current passport and current H-2A visa. An H-2A worker should not use an Individual Taxpayer Identification Number (ITIN) to pay his or her taxes. Dependents of an H-2A worker who are not eligible for SSNs should obtain ITINs.
While withholding is not required by law, withholding may benefit both H-2A employers and H-2A workers. Withholding creates an incentive for H-2A workers to file a tax return. When workers file tax returns, the IRS does not have to initiate collection efforts, and employers do not have to deal with hassles such as wage garnishment. If an H-2A employer does not withhold income, the worker should make estimated payments to avoid owing a lot of taxes at the end of the year.
Workers with dependents who live in Mexico, Canada or the United States may claim exemption deductions for their dependents. The worker’s spouse and dependents need a Social Security Number or an Individual Tax Identification Number (ITIN) to claim exemptions. If a dependent is not eligible for a Social Security Number, the dependents may apply to the IRS for an Individual Tax Identification Number (ITIN) when the tax return is filed.
Legal Aid’s Low Income Taxpayer Clinic (LITC) assists low-income taxpayers in resolving their disputes with the IRS about federal income tax matters.
We provide free legal services to people whose income is too small to hire a private attorney. If you have a tax problem with the IRS, please contact us to discuss it. Depending upon your circumstance, we may assist you in the following ways:
Education – We can answer your tax questions, as well as provide you with important information and direction.
Negotiation –We can negotiate with the IRS to obtain a reasonable payment plan and/or an offer-in-compromise that may reduce your tax burden. If your current expenses exceed your income, you may qualify for currently not collectible status.
Litigation – When your case must go to court, we can represent you.
Click here to learn more via our brochure, “Federal Income Tax Problem? Legal Aid may be able to help you.” And, click here for a version in SPANISH.
It is 2015, and time to file your 2014 taxes! Save money and file taxes for free! The Volunteer Income Tax Assistance program offers free tax help to people who generally earn less than $53,000 per year, persons with disabilities, older adults and people with limited English proficiency. Call 2-1-1 to find a free tax preparation site near you.
For more information about the VITA program, go to http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers.
For more information about having your taxes prepared, go to http://lasclev.org/wp-content/uploads/FINAL-Save-Money-File-Taxes-for-Free-2012.pdf
To learn about how Legal Aid’s Low Income Taxpayer Clinic (LITC) helps taxpayers with disputes with the IRS, click here for Legal Aid’s new brochure about our tax practice.
The Affordable Care Act (ACA) is a new law designed to make health insurance affordable. Under the ACA, the Premium Tax Credit helps reduce monthly premiums. Additionally, people without health insurance coverage will incur a penalty when they file their yearly federal tax return, unless they qualify for an exception.
Who is eligible for a tax credit? People may be eligible to receive the credit if they:
- are NOT eligible for coverage through an employer or a government plan, e.g., Medicaid;
- buy health insurance through the Marketplace;
- have household income between 100 – 400% of the federal poverty level (e.g., individual: $11,690 – $46,760 and for a family of four: $23,850 – $95,400);
- do not use the status of Married Filing Separately on their federal tax return (unless they meet the exception for victims of domestic violence); and
- cannot be claimed as a dependent by another person.
The tax credit reduces the cost of health insurance. Individuals may choose to either give the estimated credit to the insurance company in advance to lower out-of-pocket monthly premiums, or may choose to receive the credit when filing their 2014 federal tax return this year. The amount of the credit equals the cost of the health care premiums for the household minus the family’s expected contribution. The “expected contribution” for a family is based on their poverty level, ranging from 100% to 400%; families with the least money are expected to pay the smallest amount toward the cost of health care.
For example, a family of 2 adults and 2 children with household income of $40,000 (170% of poverty) could purchase health care for all 4 family members through the Marketplace for $7,630 per year. The family could get a credit of up to $5,665. So, the family might actually pay only $1,965 for health coverage, which equals 4.91% of annual household income.
Who is subject to a tax penalty? Most people must have “minimum essential coverage” to avoid paying a penalty. “Minimum essential coverage” includes health insurance through an employer, the government, an insurance company or the Marketplace where someone lives.
Some exceptions to the penalty exist in cases of short coverage gaps, hardship, no income tax filing requirement, and others. For more information on the exceptions see http://www.irs.gov/uac/Individual-Shared-Responsibility-Provision.
For the 2014 tax year, the penalty is $95 per adult, $47.50 per child, or 1% of applicable income, whichever is greater. The penalty must be paid when filing a 2014 tax return this year.
The open enrollment period to purchase Marketplace health coverage for 2015 ends on February 15, 2015. However, people can purchase health insurance through the Marketplace anytime a qualifying life event has occurred – such as a change in family size, income, or job situation.
Low-income taxpayers should discuss their personal circumstances with a tax professional before taking any action related to the tax credit or penalties created by the ACA.
 See http://www.irs.gov/uac/The-Premium-Tax-Credit.
 Calculations based on information entered and results provided from http://kff.org/interactive/subsidy-calculator/
This article was written by Legal Aid supervising attorney Dennis Dobos, who leads Legal Aid’s Low-Income Taxpayer Clinic.
The Legal Aid Society of Cleveland Low Income Taxpayer Clinic is available to assist self-employed individuals with their federal income tax problems.
Free help and education (including presentations) are available through the Clinic to help low-income entrepreneurs with their IRS issues, including the possibility of referrals for free tax preparation assistance and business advice.
Please contact Anne Sweeney, Managing Attorney for Community Engagement, at Anne.Sweeney@lasclev.org with inquiries about this assistance.
Dealing with the IRS can be a complicated and involved process. Know your rights as a taxpayer to make the process a little easier. The IRS has adopted a “Taxpayer Bill of Rights,” (see http://www.irs.gov/Taxpayer-Bill-of-Rights). As a taxpayer, you have:
1. The Right to Be Informed. You have the right to know how to follow the tax laws. You are entitled to clear explanations of the law. Anytime you receive a notice from the IRS, the agency must explain its reason for contacting you. If you have questions, call the number located at the top right corner of most notices.
2. The Right to Quality Service. You have the right to prompt and professional assistance when dealing with the IRS. The people you speak with should be respectful, and help you understand the information they provide to you. You have the right to file a complaint for poor service. First, ask to speak with a supervisor.
3. The Right to Pay No More than the Correct Amount of Tax. You have the right to only pay what is legally owed. You can schedule an appointment with your local Volunteer Income Tax Assistance (VITA) site to have your tax returns done by a professional free of charge.
4. The Right to Challenge the IRS and Be Heard. You have the right to disagree with the IRS and to submit documents that support your side. You have the right to receive a quick and fair response from the IRS. You can expect to get a reply from the IRS within 30 days.
5. The Right to Appeal an IRS Decision. You have the right to appeal most IRS decisions when you disagree. You have the right to take your tax case to court.
6. The Right to Finality. You have the right to know how much time you have to challenge the IRS. You have the right to know how much time the IRS is allowed to take to audit a particular tax year and when an audit is complete. In most cases, the IRS can audit the past 3 years of tax returns. In the case of more substantial errors, the IRS can go back 6 years. You should keep at least the last 6 years of tax returns for your records.
7. The Right to Privacy. You have the right to expect that any IRS action will comply with the law and will only be as intrusive as necessary. The IRS will also respect all other rights you are owed.
8. The Right to Confidentiality. You have the right to expect that any information you provide will not be given to anyone without your permission or unless required by law. Only after you sign a release form can your information be shared.
9. The Right to Retain Representation. You have the right to hire a lawyer when dealing with the IRS. You also have the right to know that if you cannot afford a lawyer you may be eligible for assistance from a Low Income Taxpayer Clinic.
10. The Right to a Fair and Just Tax System. You have the right to expect the tax system to consider all facts and circumstances that might affect your ability to pay.
For more information about how these rights apply to you, visit http://www.taxpayeradvocate.irs.gov/About-TAS/Taxpayer-Rights.
This article was written by John Sayers and appeared in The Alert: Volume 31, Issue 2. Click here to read a full PDF of this issue!