March 30, 2011
Nathan Hurst, email@example.com, 573-882-6217
The views and opinions expressed in this “for expert comment” release are based on research and/or opinions of the researcher(s) and/or faculty member(s) and do not reflect the University’s official stance.
COLUMBIA, Mo. –Many people are rushing to file their tax returns before the April 18 deadline. Brenda Procter, a University of Missouri Extension personal financial planning specialist and tax expert in the College of Human Environmental Sciences, says she has found that many tax filers are unaware that they are eligible for hundreds of dollars worth of tax refunds and exemptions. Procter points out that the IRS has more than $1.1 billion in unclaimed tax credits and refunds from 2007 alone. Procter says those who are eligible can still claim this money if they file by April 18.
“What many people don’t realize is that they can retroactively file or amend updated tax returns and receive refunds for up to three years in the past,” Procter said. “People who learn they were eligible for a certain exemption or refund from 2008, for example, can still file a return for that year and receive that money. The IRS owes many people hundreds or even thousands of dollars, but those people don’t know they are eligible for that money.”
According to Procter, one tax credit that confuses many people is the Earned Income Tax Credit (EITC). She says that a common misconception exists that a person must claim a child as a dependent on their tax return to receive this credit. Procter says that this is not true, but rather a person can claim this credit if the child in question lives with them for more than 50 percent of the year and otherwise qualifies them for the EITC.
“A qualifying child can be a son, daughter, adopted child, stepchild, foster child or descendent of any of them, such as a grandchild,” Procter said. “A brother, sister, stepbrother, stepsister, or a descendant of any of them, such as a niece or nephew, will qualify as well. “Whomever a child lives with for more than 6 months out of the year- that person is eligible for this credit, which can be worth several hundred dollars.”
Procter blames unemployment or change of income mid-year as another reason that people miss out on certain tax credits and refunds. She says that those who made enough money to be ineligible for many credits last year may not think to claim them this year if they suffered a loss or change of income. Procter believes it is very important for families to understand and take advantage of all the credits that exist.
“In this day and age, money isn’t going as far as it once did, due to rising food prices, etc.” Procter said. “It is critical right now for families to not leave any money lying on the table; and many people are leaving hundreds of dollars untouched simply because they don’t know it is there.”
Brenda Procter has been a state Extension specialist with a focus on poverty, serving on the MU Personal Financial Planning faculty for 17 years. Procter has worked extensively with low-income families and maintains the Poverty At Issue Web site, a resource for agencies and educators working with people in poverty. She volunteers as an income tax preparer and educator through the Volunteer Income Tax Assistance or VITA program.