For Direct-Care Workers

Federal Earned Income Tax Credit (EITC)

Earned Income Tax Credit is a refundable tax credit that provides a boost in income to working families. To be eligible, you must:

  • Be a U.S. citizen or a working immigrant with a valid social security number.
  • Have worked -- full-time or part-time -- in 2013.
  • If you have children, they must be under 19 (or 24, if a full-time student) and have lived with you for more than half of 2013.
  • Meet the income guidelines detailed below:
Number of childrenSingle, with income less thanMarried, with income less thanMaximum Federal EITC
0 $14,340 $19,680 $487
1 $37,870 $43,210 $3,250
2 $48,038 $48,488 $5,372
3 or more $46,227 $51,567 $6,044

Child Tax Credit (CTC)

The Child Tax Credit (CTC) is a refundable tax credit for working families with an annual income of at least $3,000. The CTC is up to $1,000 per child under age 17 who has lived with you for more than half of 2013. The basic eligibility requirements are the same those for the EITC.

Child and Dependent Care Credit (CDCC)

The Child and Dependent Care Credit (CDCC) is a non-refundable tax credit designed to help working families offset the expenses of care for children or dependent adults. Families can claim up to $3,000 in care expenses for one child/dependent and $6,000 for two or more children/dependents per year.

Michigan Earned Income Tax Credit (EITC)

The Michigan EITC is a refundable state tax credit available to individuals and families that qualify for the federal EITC. It is calculated when you file your Michigan income taxes and is equal to 6% of your federal EITC. For example, if you receive a federal EITC of $1,000, the Michigan EITC will be $60.

Get Your Taxes Done for Free

Many direct-care workers are eligible for FREE tax preparation assistance at a Volunteer Income Tax Assistance (VITA) site or through free online services starting in mid-January.

Whether you go to a VITA site, or do your taxes on your own, be prepared. Use this checklist (pdf) to make sure you have everything you need to file your taxes!

Volunteer Income Tax Assistance (VITA)

VITA sites are run by community-based organizations and staffed by volunteers who are trained and certified by the IRS. VITA volunteers provide friendly, quality tax preparation services and make sure that you claim all of the credits you are eligible for -- all for FREE!

You can find a VITA site near you by calling the United Way by dialing 1-800-552-1183 or by downloading this list of sites (xls).

File Your Taxes -- FOR FREE!

If you usually do your own taxes and have access to a computer, you can file both your federal and state income taxes for free by using My Free Taxes.

To be eligible to use My Free Taxes, you must:

  • Have income less than $58,000
  • Have a valid email address
  • Have a valid Social Security Number or Individual Taxpayer Identification Number (ITIN)

Avoid the Rapid Refund Trap!

Over 70 percent of people eligible for EITC use a paid tax preparer to help them with their taxes. The average cost is between $85 and $150 for e-filing. Many of these places also offer "refund anticipation loans" (also called “rapid refund”) as a way to get people their money back faster. Though you may get your money back faster, it comes at a high cost, and may have to be repaid if the IRS denies or delays or refund, or if it is less than you expected.

Example: After getting her taxes done at the local tax place in the strip mall, Cindy finds out she will get a refund of $3,300. She is offered a “rapid refund.” This “rapid refund” will cost her a $65 fee and $40 in other processing and application fees. This is in addition to the $185 she paid the preparer to do her taxes. All together, she will pay $290 to get her taxes done and for the “rapid refund” -- this is almost 10% of her tax refund! Adapted from the National Consumer Law Center (pdf). 

Stretch your Refund

Save to Win

Save to Win is a unique savings program available at credit unions across Michigan. Save to Win is a savings program that helps you save your hard-earned money and gives you a chance to win even more.

By joining a participating Michigan credit union and opening a 12-month Save to Win savings account (share certificate), every $25 deposit you make over that 12-month period is an entry for a monthly cash prize. At the end of the year, you could win one of six $10,000 grand prizes. For more information, visit Save to Win.

Save Your Refund

The IRS makes it easy to save at tax time. When you file your taxes, simply fill out IRS Form 8888, and you can split your refund – save a part of it, and get a part of it.

By saving your refund, you can also enter to win monthly and annual prizes through SaveYourRefund, sponsored by Doorways to Dreams Fund. Go to www.saveyourrefund.com for more information.

Tax Time and the Affordable Care Act

There are a lot of questions out there about how the Affordable Care Act (ACA or “Obamacare”) will impact people at tax time. Here are some basic questions and answers that can help make things clearer.

Do I need to have filed a past tax return to be eligible for a health insurance premium tax credit in 2014?

No, but if you do receive this credit during 2014, you will have to file a return during the 2015 tax-filing season. This return will verify that you received the correct credit amount for insurance coverage in 2014.

What if I receive a premium tax credit in 2014 but do not file a return during the 2015 tax-filing season?

You could lose eligibility for receiving the credit in later years.

Will any health insurance penalties be assessed on clients during the 2014 tax-filing season?

No. Individuals are not required to have coverage in 2013 and will not have to prove coverage during the 2014 tax-filing season.

What health insurance information do I need programs to take with me during the 2014 tax-filing season?

Nothing will need to be reported or calculated related to health care coverage on Tax Year 2013 returns filed during the 2014 tax-filing season.

Source: Adapted from National Community Tax Coalition information at www.tax-coalition.org.

If you would like more information on enrolling in health insurance coverage through the Affordable Care Act, go to www.enrollmichigan.com to find a Navigator to assist with enrollment, or enroll directly on www.healthcare.gov.

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