Dear 12th District Constituent:

The IRS estimates that every year between 15 and 25 percent of 12th District working people fail to claim tax savings or refunds they are eligible to receive. Many of these working people did not file tax returns because they were not required to do so and they did not realize that filing a tax return was necessary to get the benefits.

See below for information about tax credits or benefits you could be eligible to receive. I don’t want you to miss out on money you are entitled to receive for tax year 2007. So please read this newsletter carefully and seek tax assistance if you have questions. You may even qualify to get free tax assistance.

    Sincerely,

    Melvin L. Watt

Who Qualifies for the Earned Income Tax Credit?

• An individual with one child who earns less than $33,241 (or less than $35,241 if married) is eligible for a credit of up to $2,853.
• An individual with two or more children who earns less than $37,783 (or less than $39,783 if married) is eligible for a credit of up to $4,716.
• An individual without a child who earns less than $12,590 (or less than $14,590 if married) is eligible for a credit of up to $428.

Use the ^{EITC Assistant to see if you qualify.}

Who Qualifies for the Child Tax Credit?

• If you have a qualifying dependent child under the age of 17 and earned more than $11,750, you may qualify for up to $1000 per child.

For details on figuring and claiming the child tax credit, see IRS ^{Publication 972.}

Who Qualifies for the Child and Dependent Care Expenses Tax Credit?

If you pay for someone to care for your child or dependent so you can work or look for work, you probably qualify for this credit. 

• Your child or dependent must be under 13 years of age or, if 13 years or older, must be physically or mentally unable to care for herself or himself.
• You must provide a home for the child or dependent.
• Child or adult-care must be provided by a qualified daycare provider.

Form 1040 filers claim the credit for child and dependent care expenses on ^{Form 2441. Form 1040A filers claim it on Schedule 2.}

Who Qualifies for the Health Coverage Tax Credit?

The Federal Health Coverage Tax Credit was created by the Trade Act of 2002 to help certain displaced workers and retirees pay for health insurance. The following individuals are eligible for this tax credit:

• Trade-impacted workers who have lost their jobs because of increased imports or a shift in production to another country and are classified as eligible for Trade Adjustment Assistance or Alternative Trade Adjustment Assistance.
• Individuals who are at least age 55 and receive pensions from the Pension Benefit Guaranty Corporation (PBGC), or who received a lump sum payment from the PBGC after August 5, 2002 and are not entitled to Medicare, or who currently receive PBGC benefits as a survivor, as a beneficiary or as an alternate payee under a qualified domestic relations order.

The credit covers up to 65% of the cost of qualified health insurance for eligible individuals. It can be received either monthly or in a lump sum by filing for it on a federal tax return. Information about qualified health plans and eligibility is available on the Internal Revenue Service’s website at ^{www.irs.gov, enter keyword HCTC, or call the HCTC Customer Contact Center at 1-866-628-4282 (TDD/TYY 1-866-626-4282).}

Who Qualifies for the Education Coverage Tax Credit?

The following tax credits may be available to help offset the costs of higher education for yourself, your spouse or for a dependent you claim on your tax return if your adjusted gross income is $57,000 or less ($114,000 if you file a joint return):

^{Education credits are claimed on Form 8863. For details on these and other education-related tax breaks, see Publication 970.}

^{Who Qualifies for the Saver’s Tax Credit?}

^{If your income is below certain limits and you contribute to an IRA or workplace retirement plan, such as a 401(k), you probably qualify for the "Retirement Savings Contribution Credit."}

• ^{An individual who earns less than $26,000 may be eligible for a credit of up to $1,000.}
• ^{A head of household who earns less than $39,000 may be eligible for a credit of up to $1,000.}
• ^{Married couples, filing jointly, who earn less than $52,000 may be eligible for a credit of up to $2,000.} 

^{IRA contributions made until April 15, 2008 will qualify for 2007 tax returns. Use Form 8880 to claim the saver’s credit.}

^{Who Qualifies for the Energy-Saving Tax Credits?}

^{The Energy Policy Act of 2005 created Home Energy Efficiency Improvement Tax Credits to encourage spending on energy-saving improvements by homeowners. New energy-efficient improvements qualify including: insulation, exterior windows, exterior doors, water heaters, heat pumps, central air conditioners, furnaces and hot water boilers. The overall credit is limited to $500 and individuals who claimed the full $500 credit in 2006 cannot claim the credit in 2007.}

^{These credits are claimed on Form 5695.}

^{FREE TAX ASSISTANCE}

^{The IRS Volunteer Income Tax Assistance (VITA) program prepares tax returns for low-income families at no charge. Tax filers who are elderly, non-English speaking, disabled or military personnel can also file their taxes at VITA sites. Persons who are not currently employed who qualify for the EITC may also get free tax filing services through their local Employment Security Commission office. To locate a site near you, call the IRS helpline at 1-800-829-1040 or click this link to find a list of VITA sites in North Carolina’s 12th District.}

BE ON THE LOOKOUT

FOR E-MAIL AND PHONE SCHEMES USING THE IRS NAME

 

The IRS is cautioning taxpayers to be on the lookout for e-mail and phone scams using the IRS name.  The goal of these scams is to trick people into revealing personal and financial information, such as Social Security, bank account or credit card numbers.  Do not attempt to initiate contact with the IRS by clicking on a link in an e-mail or opening an attachment.  Click this link for more information on how to protect yourself or if you have received a questionable e-mail or phone call claiming to come from the IRS.