For anyone who has ever worked in the United States or worked with a US “connected person” you will have most likely heard them groan about the onerous requirement to file taxes every year. The US tax code is world famous for a myriad of reasons, one of which is the amount of legwork required by the filer. The meme below captures the situation for many.
The interaction between industry groups and lawmakers is long and drawn out and has ultimately resulted in a patchwork of “free” filing services where you ultimately complete a huge web-based questionnaire provided by a company that wants to trap you into using their paid for service. For the majority of filers, this takes about a weekend: an individual taxpayer is estimated to spend 13 hours and $240 out-of-pocket costs just to prepare and file one annual tax return [taxpayer advocate]. There is a very excellent book about this which I would highly recommend as a primer on how different countries handle their taxes: A Fine Mess.
This post thus far is not very fitting for a travel blog, but it will be covering of the work I have enjoyed with the IRS VITA program during my time out to give some more information on what I have been up to.
Given all the above, you might be forgiven for throwing up your hands in frustration and closing your tab. What a needlessly complex system!
There is some light at the end of the tunnel: the IRS is testing out its very own free-file program. In the meantime, it’s worth mentioning the VITA/TCE program: given all the above time sink, cost sink and complexity to file your taxes, it’s not surprising that the process is just too overwhelming for some people. Individuals supporting multiple dependents, between homes, on low incomes, with disabilities or not speaking English (for example) would find it impossibly overwhelming to know to where to even start (perhaps they do not even own a computer?). The VITA/TCE program in a nutshell is described as: “The IRS's Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free basic tax return preparation to qualified individuals.”. What this means is that if you make below a certain amount of income, you can go and get help with your taxes, FOR FREE!
As an aside, the program is not only important to have folks comply with the laws regarding tax filing and keep the economy going, it can actually make up part of a filer’s income for the year. That’s right! If filers dont even file their taxes they are missing out on a much needed support check from the government. In the US these are generally called credits, examples are the EITC (earned income tax credit) and Child Tax Credit. You can Google these at your leisure, but in short, you can file your taxes and be owed money, simply for working. So you see: lawmakers enact benefits to support low-income workers but then administer these benefits through the labyrinthine tax code because that’s…easier? See the book I referenced above.
And so, by signing up with a participating charity who runs VITA/TCE sessions, I was able to train up and help qualifying individuals file their taxes. In New York, the food bank runs the biggest program, saving New Yorkers millions of dollars each year. In practice, you sign up in around Fall to undertake the IRS training (which takes about 2 days in total) and take an online test. Then you sign up to sessions with the Food Bank. In practice, much of the work for the program is ensuring the taxpayer arrivers with all their documentation (social security card, 1099s, W2s etc.) and then entering into the software “Tax Slayer”. There is some data entry copying data from W2s but a lot of the process is pretty slick, with the software spitting out a complete tax return at the end, the amount owed to/from the taxpayer and some documentation for them to verify and signed. The return is then passed to a quality reviewer to double check your work.
In total I think I have completed around 100 returns over 80 hours and it has been so inspiring and humbling to meet so many New Yorkers from so many different walks of life: retirees, servers, fire inspectors, school crossing guards, uber drivers, home health aids...you name it (and usually, several of these jobs at a time), New York has got it! Seeing someone’s taxes really is a very personal thing: you have to see some of the details of their life on paper. Meeting the taxpayers through the process you get to understand each of their unique situations and how best they can file to earn the credits they are owed (for example, are they supporting people in their household vs living alone? did they buy school supplies for their class? did they take a distribution from a state/federal retirement plan?). Working with the taxpayer to let them know their credit or refund can be the most challenging/rewarding moment of the process.
Finally, although the tax code could do with some help to be made more accessible to more folks, and the requirements to use VITA/TCE could be less stringent to open it up to more people, the program really works.