THE DANDELION CONNECTION
Ellicott Square Building., 295 Main Street Room 495, Buffalo, New York 14203
(716) 847-0655 ext. 402   dandelion@nls.org    www.nls.org
Volume 8 Issue 2                                                                              March/April 2000
Copyright 2000, Neighborhood Legal Services, Inc.

in this issue..
Federal Earned Income Tax Credit
Child care credit
State EITC
Grandparent tax benefits
Educational tax credits/fs offsets
Renter’s credit
Chicken Soup Recipe

Tax News You Can Use

What is the Earned Income Credit?

        The Earned Income Credit (EIC) is money the IRS gives to people with variable incomes. You can get this credit whether or not you pay federal income tax.

Families: You may be eligible to get EIC if you meet all of the following:

1. you worked last year, and

2. you filed federal taxes last year, and

3. your income was under $26,930, and

4. you had at least one child (child, grandchild, or foster child), or a disabled dependent living with you last year. If you did, then you can receive up to $2,312 from federal income tax.

5. you had two or more children living with you and earned less than $30,580, and

6. you were not a child listed as a dependent on a tax return of a person who applied for EIC, and

7. you were not a married person filing a separate tax return. If not, then you can receive up to $3,816.

        Yes. You may receive up to $347.00 from federal income tax, if:

1. You are between 25 - 64 years of age; and

2. Your household earned under $10,200.

        You must file a federal tax return form 1040A or 1040 and Schedule EIC. If you were not raising children, you can file any tax form, including the 1040EZ. If you want the IRS to figure out your credit for you, fill out the front half of Schedule EIC. You may also be eligible for a tax credit if you pay for child care. See page 3 for more information.

        Earned income credit will be "refunded" to you in one of two ways:

(1) If you owe taxes, the credit will be subtracted from the amount you owe.

(2) If you owe no taxes, the IRS will send you a check for the credit.

        EIC payments, that you get either as a refund or advance payment, do not count as income or resources for public assistance purposes. For Food Stamps, EIC payments do not count as income, but can count as a resource. Generally, they will not count as a resource the month you get the check or the following month. Resources include cash on hand, money in banks or investments, personal or real property, and vehicles. If you do not want your EIC to count as a resource, spend it within two months. No matter what you do with your EIC, you may need to prove to DSS that you spent the money. Please keep all of your receipts.

Here is how DSS would count your EIC :

April 1-30                  Receive EIC check
April/May                  No effect on benefits
June 1                        Counts as resource - you will need to prove that you do not have
                                 more than $2,000.00 in resources.

However, the EIC will be excluded as a resource for 12 months if you were receiving food stamps at the time the credits were received during that 12 month period.

        If you get a notice from DSS telling you that EIC is being budgeted against your assistance, call and request a Fair Hearing immediately. Call us as soon as possible and we will review your case and tell you how to challenge the DSS decision or we may agree to take your case. To keep getting your present rate of benefits, you have to call for a Fair Hearing within ten days of the date on the Notice of Intent. You must ask for a Fair Hearing within sixty (60) days of the date of DSS's notice.

        To get more information call 1-800-829-1040. You can also have your tax forms filled out free at a local Volunteer Income Tax Assistance Center (VITA) from late January through April 15. Locations can be reached by calling 1-800-829-1040.

What is the Federal and State Child and Dependent Care Credit?

        One benefit the IRS gives working people who pay for child care or care for a disabled dependent is the Child and Dependent Care Credit. This credit allows workers to get credit on their tax returns for out-of-pocket expenses they have paid for their child or disabled dependent to day care centers, family and/or group child care providers or informal providers.

        If you worked during 1999 and paid for child or disabled dependent care in order to work, you may be eligible for the Federal and State Child and Dependent Care Credit.

        The Credit can get you up to $1,440 for a family with two or more children and up to $720 for a family with one child.

        Children who qualify to be claimed for this credit must be dependents and must have been under 13 when the care was provided.

        Generally, a person can be claimed if they are physically or mentally incapable of self-care. (Certain rules apply with regards to income.) For example, a taxpayer’s spouse may be claimed if the spouse is physically or mentally incapable of self-care.

        Workers who wish to claim the Credit must meet the following requirements:

• The taxpayers must have earned income and have paid more than half the cost of maintaining a household for him/herself and the qualifying individual for the year; and
• Payments must have been necessary to enable the taxpayer to go or search for work; and
• The person providing the care must be 19 years of age or older and CANNOT be the taxpayer’s dependent.

        Generally, taxpayers who are married must file a Joint Return in order to claim the credit. However, married taxpayers who wish to file separately may do so if they meet certain requirements. Please refer to your tax booklet for rules about this type of return.

Please note: Problems may arise in matters involving divorced or legally separated parents who support a child together or who have custody over half the year. In this type of situation, please refer to your tax booklet or call the IRS.

        If DSS and/or your employer makes payments to the provider directly, you may only take the deduction for the portion (i.e., co-payment) actually paid by you.

        For example, if the total cost of care for your child is $80.00 per week, and your co-payment is $10.00 per week, you can only claim $520.00 for the year ($10 x 52 weeks), and not $4,160.00 ($80.00 x 52 weeks). The provider may be able to provide a statement for the total amount you paid for child care for the year.

        No more than $2,400 can be claimed for 1 child and no more than $4,800 for 2 or more children.

        Also, if you are working and receiving partial public assistance and you pay the child care provider with money that DSS puts into your grant, you may not take the Child and Disabled Dependent Care Credit because the funds came from another source.

        If care is provided in your own home, you are considered to be the employer of the person providing the service. In this case, tax law rules may apply regarding payment of unemployment insurance, social security, Medicare, etc. , on behalf of the individual providing the care. In addition, the Department of Social Services (DSS )has certain requirements for care being provided in your home. You may wish to contact both DSS and the IRS in such cases.

        Yes. If you pay any individual or agency to take care of your child (or disabled dependent) while you work and wish to claim this credit, you must provide the IRS with either an Employer ID Number or a Social Security Number along with the name and address of the individual or agency. Generally, individuals and/or agencies providing the care must report their earnings to the IRS. (Certain rules apply regarding income which must be reported.)

        To claim the credit you must file your federal and state tax returns.

Advanced EITC

        Yes. You can get EIC in your paychecks. You must complete and return the Federal Tax Form W-5 to your employer before you can get it. Your paychecks will then be increased by the basic credit.

        If you get EIC in your paychecks, you must file a federal Form 1040A or 1040 for the next year. If you got more EIC than you should have, you must repay any overpayment. If you got less than you should have, you will get the additional credit when you file.

        An employee who earns less than $27,413 and who has a qualifying child can get the EIC advance.

        A qualifying child must be under age 19 or a full time students under age 24. Totally and permanently disabled children of any age also qualify. Children include children, stepchildren and adopted children as long as they live with you for more than ½ the year. Foster children can only qualify if they live with you all year.

        The advance payment can make it easier to meet day-to-day expenses. Many employees may get up to $100 each month in their pay rather than waiting to claim all their credit when they file in 2000.

        To get the EIC advance payment you must submit a W-5 form to your employer each year. Your employer has this form or you may get one by calling 1-800-TAX - FORM. Employers are required to provide you with advance EIC payments if requested.

State Earned Income Tax Credit

Is there also a State Earned Income Tax Credit?

        Yes. New York offers a state earned income tax credit in addition to the federal credit.

        1. You may be eligible to get the state EIC of up to $462.00 if you have at least one child living with you and earned less than $26,930;

        2. You may be eligible to get the state EIC of up to $762.00 if you have two or more children living with you and you earned less than $30,580; or

        3. You may be eligible to get the state EIC of up to $69.00 if you have no children, but earned less than $10,200.

        1. You must file for the federal EIC in order to get state EIC.

        2. You must complete New York State's IT-215 Claim for Earned Income Credit and attach it to your state income tax return.

TAX BENEFITS FOR GRANDPARENTS RAISING GRANDCHILDREN

        If you are a grandparent and you have taken a child into your household, you may not be aware of all the tax benefits you are now eligible for. Make sure that you are getting the tax benefits you deserve! Benefits you may be eligible for include:

*Child and Dependent Care Tax Credit- a benefit for working caregivers who pay someone else to care for their child when they work. (See page 3 for more information.)

*Earned Income Tax Credit (EIC)- a benefit for low/medium income working people. This tax program can provide a cash payment in the form of a check even if you do not owe any taxes. In most cases, the EIC money you receive will not affect public assistance, Medicaid or food stamps or subsidized housing. (See page 1 for more information.)

*Some employers set up an Employee Dependent Care Account. This is done through your employer and sets aside up to $5,000 a year in pre-tax benefits for child or elder care. Money in such a plan that is not used can be lost, so keep track of what is deducted.

*IRS at 1-800-829-3676 or 1-800-829-1040

*The AARP Tax Aide Program has local sites from February 1 until April 15. Contact them through the Erie County Office for the Aging at 858-8526,

or

* Your local VITA Volunteer. Call 1-800-829-1040

Did you know that the IRS offers two tax credits designed to help students with educational expenses. These educational tax credits are called the Hope Credit and the Lifetime Learning Credit.

The Hope Credit allows you to claim up to $1,500 for qualified educational expenses. In order to be eligible for the Hope Credit you must not have completed the first two years of post-secondary education in a degree, certificate or other recognized educational recognition. You must also have been enrolled at least half time and never been convicted of a felony for possessing or distributing a controlled substance.

The Lifetime Learning Credit is $1,000 per year. It can be taken during any year of post-secondary education (including graduate school). It is not as restrictive as the Hope Credit , however you cannot take both credits in the same year for the same student. You can take both credits for two different students. (Example: Mary has two children in college. Jessie is a college junior and Andrew is a freshman. Under this scenario Mary could take the Hope Credit for Andrew and the Lifetime Learning Credit for Jessie if they are otherwise eligible.)

In order to take these credits you can file “Married Filing Separately”; the person for whom you are claiming the credit cannot be claimed as a dependent on another person’s tax return; and your adjusted gross income cannot be above $100,000 for those who are married and file jointly or $50,000 if single or using head of household status. The expenses that qualify towards this credit are amounts paid for tuition and required for attendance or enrollment. Insurance, room/board, books, supplies and fees for equipment and activities do not count as qualified expenses. You can also take this credit if you borrowed money (student loans) to pay for these expenses even though you are not currently paying them back. You cannot use tax free scholarships, Pell grants or tax free employer-provided educational assistance to pay education expenses and still take the credits. However, if you have to pay for qualified expenses over the amount of your grants and scholarships, you could claim that portion.

If so, you may be able to put off paying for awhile. Everyone who requests a review of the offset will be taken off the list to be offset this year. This does not mean that you will not owe the money, it just means that the debt will not be collected this year through the treasury offset program.

If you received a pre-offset notice, request a review by writing to the address on the notice and keep a copy of the letter for your files. If you need help requesting the review, call Project Dandelion at 847-0650 x 402 for help.

student loan clinics

Project Dandelion is starting a Student Loan Clinic to help you get a handle on your outstanding student loans. We will discuss topics like student loans and delinquencies, defaults, deferrals, forbearances, loan rehabs, renewed eligibility for loans and consolidations. You can bring your student loan information to the clinic and we will discuss your options with you and help sort out what can turn out to be an overwhelming debt. Space is limited to 8 people per clinic - so call in advance to reserve a space. The clinics will be held the first Wednesday of every month at 2:00 starting April 5th. Call Project Dandelion at 847-0650 x 402 to reserve a seat, or to get more information. See you there!

expanded hours

We have seen an increased need to provide services outside of regular business hours. Because many of our Dandelions are working, we will offer services on Saturday mornings so that we can be available to you when you are not working. Our “Saturday Morning Telephone Call-In Program” will begin on March 11, 2000 from 9:00 a.m. to 12:30 p.m. We will also be open on March 25, April 8 and April 22 from 9:00 a.m. -12:30 p.m. This is a pilot program and will continue only if there is a need for these services. We hope that we hear from you! Call 847-0655 x 402 and leave a message. You will be called back between 9:00 a.m. and 12:30 p.m. on Saturday.

Yes. Taxpayers who want to claim this type of credit must meet all of the following eligibility requirements:

1.  A household’s gross income cannot exceed $18,000, and
2.  The taxpayer must live in the same New York residence for 6 months or more, and
3.  The taxpayer must pay rent or property taxes, and
4.  The taxpayer must be a New York resident for the entire year, and
5.  The taxpayer cannot be a person who could be claimed as dependent, and
6.  The value of all the taxpayers real property cannot exceed $85,000, and
7.  The average monthly rent cannot exceed $450 per month not including utilities, and
8.  Any rent received by the taxpayer for non- residential use of the resident cannot
     exceed 20% of the total rent received, and
9.  The taxpayer’s residence must not be wholly exempted from real property taxation.

The maximum credit is $375.00 for people over 65 and $75.00 for other taxpayers.

To claim this credit you must complete the New York State tax form IT-214. You may file the form even if you do not have to file a state tax refund due to the lack of earned income or any other reason.

Take time from your taxes to make some good food.
Take a tip from Beth White.  Eat CHICKEN SOUP it cures what ails you….

        Take one whole chicken and pull off all the skin. Put the skinned chicken in a very large pot, along with it’s gizzards (neck, liver, heart, etc.). Put in all the sliced carrots and minced celery. Cover chicken and vegetables with 14-16 cups of water. Put it on the stove on high and boil until chicken is done. I add lots of salt in the water while it is boiling (but salt it to your own taste). Next, boil one bag of egg noodles until they are done. Drain and put aside. When chicken is done, take it out and run under cold water. While running it under cold water, take all the chicken meat off of the bones and throw the meat in small pieces back into the water with the vegetables. Take out the gizzards and throw away. Put the chopped onion into the soup. Boil until the carrots are done. Turn heat off. Put in the noodles. In a small fry pan, sauté 2 tbsp. oil, 1 clove garlic (chopped very small) and 1-2 tbsp. of dill weed for just a minute or two (do not brown the garlic). Put the sauté into the soup and mix it. Season to taste. Enjoy!!

Ingredients: 1 whole chicken, skinned; 7 carrots, peeled and sliced; 1 large onion, minced; 3 stalks of celery minced; egg noodles (1 bag); 2 cloves fresh garlic, minced small; 1 tsp. Dill weed (not dill seed); 1 tbsp. oil; lots of salt.

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