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Sunday, February 15 2004 

Frank Charney. Click for profile.The AARP tax aide program

For the fourth straight year I am a volunteer in the American Association of Retired Persons (AARP) Tax-Aide Program. Established in 1968, the program provides people over the age of 60 free assistance in filing their taxes by the April 15 deadline. There is no charge for this service. Besides assisting seniors, the program is also directed to helping anyone with a low-to middle-level income that needs help in filing taxes. Specific tax issues such as how one deals with pensions, stock investments, social security and other kinds of retirement benefits are emphasized. The program helps seniors in assuring they are getting the full benefits to which they are entitled. Knowing about an individual's personal finances gets a Tax-Aide involved in a very personal way, and it is a great sense of satisfaction to give advice and knowledge to people seeking this type of help. For example, I assisted a senior with a modest retirement income who stated that he had a name tax preparation service do his taxes the previous year, and he had to pay them $150 to discover he owed $600 to the IRS. In seeking AARP tax assistance, he avoided any additional costly fees. Another Tax-Aide stated she spent a total of 9 hours assisting a homebound couple do their involved taxes. You can imagine the savings, if instead a tax CPA had performed the service.

At the end of a session with a Tax-Aide, the only thing a taxpayer has to do is sign the form, place a stamp on it, and send it to the IRS.

Every year in January, I typically begin to attend five days (experienced Tax-Aides require fewer days of training) of classes on subjects for both Federal and Virginia taxes. To be certified, I have to score 80 percent on a 15-hour (usually 30 hours for me) take-home exam prepared by the IRS. Failure on any portion of the test requires repeating that section with new tax problems. Not meeting the grade criteria on the second go around disqualifies a volunteer for that year. The AARP tax program does not do forms and schedules on rentals or business items like depreciation, because of liability issues.

One area of taxes, termed Earned Income Credit (EIC), is of particular interest to large tax preparation companies like H&R Block and Jackson-Hewitt. Wily tax preparers who rent the recently vacated store in your shopping center are also in the act. The EIC is a tax credit for people who have earned income under approximately $35,000. A tax credit usually means more money in this person's pocket, because it reduces the amount of tax he owes. Since the low-income person is usually strapped for cash, these firms offer a Refund Anticipation Loan (RAL). RALs are short-term, high-interest loans guaranteed by your tax refund. These firms will gladly oblige a taxpayer requesting an RAL, and he can get his refund in two or three days, compared with the normal five- or six-week waiting period from the IRS (a much shorter period when filing electronically). For example, a person who gets an RAL for $500 pays the firm the sum of approximately $200 in extra charges (interest, filing fee, and peace of mind guarantee). It's all legal presently, but a number of states and consumer advocacy groups are protesting this form of usury that robs from the middle class.

Taxes require diligent study because of the never ending changes, and I constantly discover that I am only scratching the surface of this subject.

—Frank Charney

Steven Wrightisms

2 - Borrow money from pessimists—they don't expect it back.

—Sent by Trudy Myers 

Thought for today

Remember that there is nothing stable in human affairs; therefore avoid undue elation in prosperity, or undue depression in adversity.

— Socrates 

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