Filing a tax return can be a daunting prospect for some people, especially those who are technologically challenged. Furthermore, lower earners often don't have to file a tax return, but by not doing so, they miss out on key money-saving opportunities. The Earned Income Tax Credit, for example, is a fully refundable credit (if it reduces your tax liability to under $0, the IRS pays you the difference) that's designed to help low-income households, but those who neglect to file a return lose out on it.
It's for this reason that help is generally made available to Americans through the Volunteer Income Tax Assistance (or VITA) program. For over 50 years, the program has offered free tax-filing assistance to people who:
- Earn $57,000 a year or less.
- Have disabilities.
- Don't speak English or have limited English-speaking ability.
But this year, that free help may look a lot different because of the pandemic. And countless tax filers could lose out on it as a result.
Adapting to changing times
Just as a lot of tax professionals are offering their services remotely this year due to the pandemic, so too are VITA volunteers largely skipping the face-to-face meetings they'd normally have and instead are offering their services remotely by videoconferences and phone.
The problem? Many of the people who'd normally use those services will see this new framework as a barrier and not get the help they need.
Last year, the VITA program saw fewer participants on both ends. In 2020, it had about 10,000 fewer volunteers than usual, and it prepared 1 million fewer tax returns than it did the year before. The concern is that this year, the program might assist with even fewer returns as those with technological constraints forgo help, or miss out on help because they don't realize it's still available.
Skipping a tax return this year could be even more catastrophic for filers who never received the stimulus payments they were entitled to. In late March, an initial $1,200 stimulus payment was approved under the CARES Act, and in late December, a second $600 payment was approved that hit many people's bank accounts in January.
But not everyone who was eligible for a stimulus got one. And a big reason stems from the fact that in order to send out checks, the IRS relied on tax return data and registration data from its non-filer tool (set up to allow people who don't submit a return to register for a stimulus).
For those who didn't file a tax return for the past two seasons or register for a stimulus, their only option now to get that missing money is to claim it on their tax returns in the form of the Recovery Rebate Credit. But in the absence of tax help, a lot of people may inevitably give up that money by not filing a return.
The good news is that the VITA program is still operating in person in some parts of the country. And anyone who's eligible for help through VITA can also use the IRS' Free File service to submit a tax return at no cost. But still, it's fair to say that a lot of people will miss out on tax help this year, and lose out on income because of that.