Resource

Checklist of Tax Issues for DV Survivors

Fact Sheets 5 minutes

The following FAQs and resources for tax assistance are designed to provide general information about some tax issues that survivors may face. You should not fill out your clients’ tax returns, or answer specific tax questions.

Does my client need to file a federal tax return?

  • Yes, if gross income in 2015 was
    • Single and under 65: $10,300 or higher
    • Married filing jointly under 65: $20,600 or higher
    • Married filing separately: $4,000 or higher
    • Head of household and under 65: $13,250 or higher
    • Widow(er) under 65 with qualifying dependent: $16,600 or higher
  • Yes, if:
    • she paid federal taxes and wants a refund
    • she may be eligible for the EITC or Child Tax Credit
    • she was self-employed
    • she took money out of an IRA, 401(k) or 403(b) retirement savings account
    • she may owe taxes on tip income
    • she sold her home
  • Maybe, if she wants to establish her own tax records separate from a spouse

What filing status should my client use?

  • Filing status choices:
    • Single
    • Married Filing Jointly
    • Married Filing Separately
    • Head of Household (for tax filers supporting dependents)
    • Qualifying Widow(er) with a Dependent Child
  • Considerations for married survivors
    • Marital status is based on whatever it was the last day of the taxable year (unless a spouse died during the year), not when taxes are filed
    • Married filing jointly (MFJ) status means joint tax liability
    • Married filing separately (MFS) status will disqualify survivors from the federal EITC and Child and Dependent Care Tax Credit
    • Survivors can file as single if legally separated or divorced.
    • Survivors can file as Head of Household if
      1. She is legally separated OR lives apart from her spouse for the last six months of the year and
      2. She pays half the cost of maintaining a household
      3. Where a dependent child lives for over half the year

Is my client eligible for tax credits? Maybe!

  • Federal EITC: refundable tax credit worth up to $6,242
  • Federal Child Tax Credit: refundable tax credit worth up to $1,000 per child
  • Federal Child and Dependent Care Tax Credit: tax credit worth up to $2,100
  • Your state may also offer tax credits for families. Visit www.nwlc.org/loweryourtaxes for more information.

My client needs help paying for health insurance—is she eligible for the Premium Tax Credit?

If her household income is between 100%-400% of the federal poverty line ($20,090-$80,360 for a family of 3) and she isn’t eligible for other adequate and affordable health insurance (either through an employer or Medicaid/Medicare), she is eligible for a Premium Tax Credit subsidy to help her pay for health insurance purchased through the Health Insurance Marketplace. This subsidy can be paid on a monthly basis to health insurers—recipients don’t have to wait until tax time to benefit.

Although IRS rules require married individuals to file a joint tax return in order to claim the Premium Tax Credit on their tax return, there is an exception for still-married domestic violence survivors where filing a joint return is impossible or dangerous.

Visit https://www.nwlc.org/premium-tax-credit-information-resources for more information
about the Premium Tax Credit, and go to www.healthcare.gov or call (800) 318-2596 to find
out more about health insurance options in your area.

Where can my client get help filing her taxes?

  • The IRS-sponsored VITA program. Call (800) 906-9887 or visit http://irs.treasury.gov/freetaxprep/ to find a VITA site near you.
  • The AARP-sponsored Tax-Aide program. Call (888) 227-7669 or visit
    www.aarp.org/money/taxaide/ to find a Tax-Aide site near you.
  • The Free File Program (free online tax preparation software).
    For more information, visit http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free.

How can my client get her refund?

  • If she is worried that her abuser will get her mail.
    • Many advocacy organizations will provide access to a state Address Confidentiality Program,
      which provides survivors with a safe address where their refund check can be sent.
    • Your program can also provide an address.
    • Have the refund directly deposited to a bank account.
  • If she doesn’t have a bank account.
    • Some EITC coalitions offer asset-building services, financial education, or help opening bank accounts. To find an EITC coalition in your area, visit
      www.cbpp.org/eitc-partnership/directory.htm.
    • Some VITA sites have options for pre-paid debit cards. There are some
      downsides, including user fees and the fact that, if the card is lost, so is the refund.

What if my client has tax problems with the IRS?

  • Low-Income Taxpayer Clinics can provide tax advice and representation. To locate one
    near you, visit http://www.irs.gov/uac/Low-Income-Taxpayer-Clinics.
  • The Taxpayer Advocate Service can intervene with the IRS in case of economic harm,
    administrative delay, or impact on other legal rights. To locate the TaxPayer Advocate
    Service office nearest you, call 1-877-777-4778.

What if my client can’t pay her tax bill or fees?

  • Survivors may be eligible for reasonable cause relief from Failure to File and Failure to Pay penalties (but not interest) when there is a reasonable excuse for failure to file or pay taxes due (not neglect, ignorance of the law, or mistake).
  • Survivors whose spouses or ex-spouses have tax problems may be able to seek injured spouse or innocent spouse relief.
  • Survivors may have options if they can’t pay taxes due:
  • Currently not collectible status (IRS will hold off collections if person establishes insufficient funds above the Allowable Living Expenses):
    1. Fairly automatic if low liability and dire circumstances; otherwise may require advocacy and verification of 3 months of financial information.
    2. Request through IRS Automatic Collection Service, IRS Practitioner Priority Service, a Low Income Taxpayer Clinic, or the Taxpayer Advocate Service.
  • Installment payments
    1. Person must be in compliance with filing obligations.
    2. Automatic approval for amounts under $50K payable over 72 months; otherwise
      detailed financial information required.
    3. Initial fee of $120, or $52 (if direct withdrawal), or $43 (if at or below 250%
      of poverty guidelines).
    4. Request online (for automatic versions), with Form 9465, through IRS Automatic Collection Service, IRS Practitioner Priority Service, a Low Income Taxpayer Clinic, or the Taxpayer Advocate Service.
  • Offer in compromise (IRS may lower amount that has to be paid).
    1. Person must be in compliance with filing obligations.
    2. Application user fee is $186, but can be waived if at or below 100% poverty level.
    3. Request with Form 656; assistance from a Low Income Taxpayer Clinic may be available.
  • Contact a Low-Income Taxpayer Clinic near you for specific advice, at
    http://www.irs.gov/uac/Low-Income-Taxpayer-Clinics.

 

For more information, contact Amelia Bell at abell@nwlc.org

Published On: January 12, 2016Associated Issues: Tax & BudgetTax Credits Outreach

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