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Feb 01st
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Deductive Reasoning

Volunteers help locals maximize tax discounts

Waiting a couple of hours for free help with filing taxes feels like getting paid $400 for a half day's work, says Shadowbrook restaurant server Glen Wunderling, 55.

“This is a great service because it's always good to have a second eye look over the forms,” Wunderling says. “It can get really confusing with all the legal and tax code changes.”

Wunderling is one of 3,700 Santa Cruz County taxpayers who, according to the IRS, collectively overpay between $6 and $8 million in taxes every year because they don't claim deductions and rebates they are eligible for. Wunderling says he failed to claim his Making Work Pay tax rebate in 2009—part of President Barack Obama's stimulus plan. That is why he was waiting for a volunteer tax preparer from Project Senior Citizen Outreach (Project Scout)’s Volunteer Income Tax Assistance (VITA) program at the Aptos Public Library on March 22.

On his first trip to one of their sites in 2011, Wunderling found out about the 6.25 percent discount—good for up to $400—he qualified for in 2009 and 2010. His volunteer tax preparer helped him get the discount in 2011 based on his previous year's wages, and told him to bring his past returns to file for the discount on his taxes from 2009 wages.

Project SCOUT's team of 30 volunteers spend 35 hours a week helping older residents navigate the constantly shifting tax landscape at sites throughout the county. They will be at locations including county library branches and the Mid-County Senior Center in Capitola until April 17.

For more than 30 years, volunteers ranging from retired IRS auditors and private tax preparers to university students training for finance careers have helped local residents claim millions of dollars. The program is run out of the Senior Citizens Council of Santa Cruz and San Benito counties. VITA preparers are trained and certified by IRS officials, ensuring that people receive high quality help at no cost.

“[In 2011] we helped people receive about $1.8 million,” says Project SCOUT coordinator Jan Shirchild. “We are a bit different than some tax assistance programs because we can go back up to three years to get refunds or discounts people missed.”

Rebates from taxes paid on 2008 wages can still be claimed until April 17. The Make Work Pay rebate is one common way people have been paying too much to the government recently, but unclaimed earned income tax credits also make up a large portion of millions local residents leave on the table when filing. These credits max out at $5,700 and people using volunteer filing in the county received nearly $2,000 on average.

In addition to lassoing cash into the local economy, Shirchild says these discounts can keep people out of a “downward spiral” that could lead to reliance on government programs or homelessness.

“When people lose their jobs, bills start piling up,” she says. “If you can't, for example, pay your car insurance, you can't drive to a job interview for that future position.”

Wunderling says that this year he most likely owes the government, but that the $400 rebate from 2009 will go a long way to help with his 2011 bill. On years he gets cash back, the money goes in the bank as an emergency reserve.

“It will get spent, but not on big-screen TVs,” says Wunderling.

The program is available to anyone making less than $49,000 that files using a 1040 tax return, including retirees and employees. The majority of people coming are making closer to $20,000, and these people are sure to spend the money from any refund quickly. This in turn boosts the local economy.

Shirchild says that tax returns such as 1099s, which self-employed entrepreneurs file with more complex deductions, have to go to a professional tax preparer.

“We are limited in what we can do,” she says. “Also, the idea is not to take away business from professional preparers.”

However, people paying for tax services should always read the fine print and avoid offers called “tax refund loans” or “federal refund anticipation checks,” warns the Watsonville Law Center. H&R Block's offer of an instant refund through a prepaid MasterCard includes fees at some ATMs “even if you don't complete a withdrawal.”

“If you are offered your tax refund immediately, it’s probably a loan,” the group says in recent public service announcement. “Fees and interest will be deducted from your refund—huge interest—200 percent interest or more.”

In the age of electronic filing and direct deposit, citizens will receive their refunds almost as quickly as by waiting for the real thing. H&R Block advertisements for fast access to your money are in comparison to “mailed checks from the IRS, which normally arrive [in 18-25 days].” Electronically filing can cut this time drastically, and the Watsonville Law Center says good things come to those who wait.

“Don’t pay to borrow your own tax refund,” says their PSA. “Don’t waste your money on an ‘instant’ refund just to get it a few days sooner. When you receive your entire tax refund, you’ll be happy that you waited.”

Other things to watch out for include phone calls from anyone who claims to be the IRS. The IRS communicates only with individuals through the mail, so emails and phone calls should quickly be spotted as frauds, according to banks.com.

With so many ways to trip up on the way to your refund, people using Project SCOUT services are grateful that someone is leading the way for no charge.

One 70-year-old Capitola resident, who declined to give her name, says she has used Project SCOUT for the last eight years. “I always go to [volunteer] Sue because she is quick, explains everything and knows exactly what needs to be done,” she says.

The organization also does house calls for anyone unable to make it out to their locations because of disabilities or lack of transportation. They also prepare taxes by appointment after the April 17 deadline.

Shirchild says that in her eight years coordinating the program she has seen small increases in tax rebates save people big financially.

“The things we hear people spending the money on are really basic,” she says. “Like, oh my god, I can pay my rent.”

The Project SCOUT schedule is available at santacruzpl.org Call 724-2606 for appointments.

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