Senator Erika Geiss on Tax Tips

Dear Neighbor,

Now that the holiday season is behind us and it’s a new year, it’s time to begin to turn our attention to tax time. As with the previous tax season, because of the ongoing COVID-19 pandemic, this tax season may present some new and difficult challenges. I hope that the information provided in this guide is helpful as you begin filing your 2021 taxes — and perhaps it will make what can seem like a difficult task a bit easier to navigate.

I am here to work for you, and so if you have any concerns, questions, or issues relating to public assistance, state departments, or state programs, please reach out to me and my office team. We will always do our best to help resolve your concerns, and if we can’t, we will help you find the right people who can.

To share your questions, concerns, thoughts, or suggestions, please call my office at (517) 373-7800, or toll-free at (855) DIST006 (855-347-8006). You can also sign up for my e-newsletter to stay apprised of current issues at the Capitol at SenatorGeiss.com. It’s an honor to continue to serve you in the legislature as your state senator.

Working for You,

Erika Geiss
State Senator
6th District

Website: SenatorGeiss.com
Email: SenEGeiss@senate.michigan.gov
Phone: (517) 373-7800
Toll-free: (855) DIST006 (855-347-8006)
Social Media: State Senator Erika Geiss Facebook

FREE HELP WITH TAX PREPARATION

There are free tax services in Wayne County available through the Wayne Metropolitan Community Action Agency and the Accounting Aid Society for people whose household income is less than $57,000.

You can make an appointment with these two free services online or by phone.

Must have driver’s license or state identification, social security cards, and all tax documents. A signature is required from all tax filers.

There are also many mobile tax preparation assistance sites throughout Wayne County. For a full list, including those with childcare options, visit WayneMetro.org/taxes or you can call 2-1-1.

TAX TIPS: Keep More of Your State and Federal Tax Returns

Prepare now to be able to file with the state and federal governments before the national deadline on Monday, April 18, 2022. Note, certain local municipalities also have income tax requirements for people who work in that municipality even if they are not a resident there. By January 31st, you should receive W2s, 1099s and other earnings documentation from employers or companies for which you are an independent contractor. If you do not receive such documents by the end of January, you should contact them so that you have them in time to file on time.

Below are some helpful tips on utilizing some of the most common tax deductions and ways to stay clear of common tax-related and other financial scams.

For federal returns, IRS.gov is the official website of the Internal Revenue Service. They will only contact you through regular mail delivered by the U.S. Postal Service. The Michigan Department of Treasury’s official website is Michigan.gov/treasury, but they also have a dedicated tax page at Michigan.gov/taxes. The State of Michigan will also only contact you by mail.

Home Ownership Deductions

Costs such as property taxes and points paid to get a lower home loan interest rate are deductible, as is interest on home equity loans up to a certain threshold.

Your deduction is generally limited if all mortgages used to buy, construct, or improve your first home (and second home, if applicable) total $750,000. Mortgages that existed before December 14, 2017 will continue to receive the same tax treatment as under the old rules.

Also, if you live in your home for two of the five years before you sell, you will not owe taxes on up to $250,000 in profit (or $500,000 for a married couple filing a joint return) from the sale of your principal home.

Charitable Giving Deductions
You can usually claim the full amount you give to an IRS-qualified organization as an itemized deduction on your federal taxes. Since 2012, however, credits for certain donations are no longer available on your Michigan tax return. Be sure to check with IRS.gov or your tax preparer (if applicable) for which types of charitable giving are permitted as deductible from your taxes.

Medical Expenses and Other Deductions

Medical costs that exceed 7.5% of your adjusted gross income may be claimed on your taxes. Be sure to include them as itemized deductions. You may also qualify for deductions from student loan interest, child and dependent care, mortgage interest, and more.

Avoid Scams
It is important to remember that tax season can and does bring with it an increased number of scams. The IRS will only send you communications through the U.S. Postal Service.

The IRS will never:
• Call, text, or email you to demand immediate payment or for taxes owed;
• Demand payment without appeal;
• Require a specific payment method;
• Ask for credit card information over the phone;
• Ask for you to pay tax penalties in gift cards; or,
• Threaten to involve local law enforcement.

Visit IRS.gov and the Michigan Attorney General’s Tax Debt Resolution Scam FAQ page online at Michigan.gov/AG (click on “Resources” from the menu and then choose “Consumer Alerts” followed by “Scams”) for more information and to learn about additional ways to protect yourself from tax scams.

Senior Programs

Part of having a family is growing old together and helping each other out. There are resources and support programs available to seniors that can help. You can reach out to the places below for more assistance.

The Senior Alliance

thesenioralliance.org

The Senior Alliance connects older adults and their caregivers in southern and western Wayne County with resources, services, and programs. All persons age 60 and older who reside in the region are entitled to receive services funded by the Older Americans Act and Older Michiganians Act, regardless of their financial or social status. Visit their website to learn more about the programs and services they offer.

Home Heating Help

THAWFund.org/Programs (800) 866-THAW (8429)

While we are currently wrapping up a warm summer, winter is inevitably on the horizon. During the cold months, heating bills can become a burden that causes many to struggle just to keep their house warm. Fortunately, The Heat and Warmth (THAW) Fund can help.

THAW has multiple utility assistance programs available, including affordable payment plans for customers of DTE’s Low Income Self-Sufficiency Plan (LSP) and the Consumers Energy Consumers Affordable Resource for Energy (CARE) plan. They also offer resources for utility payment assistance and/or state emergency relief.

Wayne County Senior Services

30712 Michigan Ave., Westland, MI 48186 | (800) 851-1454 seniornutrition@waynecounty.com

If you are looking for information about aging well, check out the seniors’ section of the Wayne County Senior Services website at waynecounty.com/departments/seniorservices. Many resources are available for volunteering, donations, meals, legal issues, and local services, as well as other valuable information. Be sure to check out their Senior Resource Directory — it has quite a bit of useful information!

Wayne County Meals on Wheels

30712 Michigan Ave., Westland, MI 48186 | (800) 851-1454

Meals on Wheels helps senior citizens eat nutritious meals by providing five meals per week to homebound, older adults. They also offer liquid nutrition for those who are unable to eat solid food and who have a prescription from their physician.

To qualify for Meals on Wheels, an adult must be:

• 60 years or older;
• Homebound (e.g., unable to leave home without assistance and unable to drive);
• Unable to cook for themself;
• Have no one willing to prepare meals on a regular basis; and,
• Able to feed themself.

TAXES DURING COVID: CHANGES FOR 2021

Reconcile Advanced Child Tax Credit Payments
When President Biden signed the American Rescue Plan Act of 2021, the Child Tax Credit increased from $3,000 to $3,600 per child for nearly all working families for 2021 and allowed advance payments.

When you file your 2021 tax return, you should compare the advance credit payments with the amount that you can properly claim on your taxes. The IRS will send you Letter 6419 and provide the total amount of Child Tax Credit payments you received in 2021. If you received less than what you are eligible for, you will receive the remaining balance in your tax return. If you received more than you are eligible for, you may need to repay the remaining balance when you file.

Economic Impact Recovery Rebate Credit
Because of the COVID-19 pandemic and the resulting economic challenges in many communities, the federal government issued Economic Impact Payments, which were paid in three installments, one of which will count on your 2021 taxes.

Those who did not qualify for the third payment, or who did not receive the full credit, are eligible to receive the remaining total to the $1,400 that was issued. To receive the payment, you must fill out a 2021 tax return, even if you do not normally file. If you are unsure if you received any (or all) of the money, the IRS will send you Letter 6475 in early 2022 to provide the total amount of the third Economic Impact Payment and any Plus-Up stimulus payments you received.

Plus-Up payments were additional payments the IRS sent to those who received a third Economic Impact Payment based on a 2019 tax return or information received from the Social Security Administration or Veterans Administration. According to the IRS, you may have received a Plus-Up payment if your income was less in 2020 compared to 2019, or if you added a dependent on your 2020 return.

Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a proven tool for putting more money back into the pockets of working families and lifting people out of poverty. The EITC is both a federal and state tax credit, although the state only provides 6% of the federal EITC. The amount of the tax credit depends on income, filing status, and qualified children claimed as dependents. To qualify, you must fill out a federal tax return.

Paid Tax Preparer ID
Beginning last year, all paid tax preparers must sign and affix their tax preparer identification number from the IRS when filing. This is a small, but meaningful, consumer protection for Michigan residents who utilize paid tax preparation services of both larger firms and companies, as well as individuals. By submitting their identification number, consumers can be sure that their taxes are filed safely and without risk of fraudulent or “ghost” filings. Volunteer tax preparers and those that are found through programs such as AARP do not need to submit their ID number. I was proud to introduce this legislation and see it signed into law in late 2020, as it is now in its second year as state law (PA 77 of 2020).

UNDERSTAND REFUND TIMING

Last year, the IRS processed more than 240 million tax returns and they were very efficient at turning returns and payments around in 21 days. Despite that, it is unwise to rely on the IRS and your bank to process your return and/or payment by a specific date. All kinds of delays can occur, such as processing a mailed-in return; security checks for refund fraud and identity theft; some tax credits such as the Earned Income Tax Credit cannot be issued until mid-February; and more.

NOTE: Refunds for taxes that are filed electronically with your bank’s routing number and information provided are usually received sooner than refunds that are mailed by the U.S. Postal Service.

Contact Me!

Website: SenatorGeiss.com

Email:SenEGeiss@senate.michigan.gov

Phone: (517) 373-7800

Toll-free: (855) DIST006 (855-347-8006)

Social Media: State Senator Erika Geiss Facebook