Friday, April 25, 2008

How to determine Low-Income Tax Returns?

IRS Tax Attorney - - Presented by Alvin Brown and Associates

After getting conflicting information on how much income is low-income for VITA purposes, it is enlightening to note that there is a definition proposed to congress to define what is the definition of a program assisting low-income taxpayers.

"(B) Assistance to low-income taxpayers. --For purposes of subparagraph (A), a
program is treated as assisting low-income taxpayers if at least 90 percent of
the taxpayers assisted by the program have incomes which do not exceed 250
percent of the poverty level, as determined in accordance with criteria
established by the Director of the Office of Management and Budget."

It does suggest that in order to meet the goals of the program, VITA as a whole, and possibly within individual sites, should ensure that at least 90% of the taxpayers they assist should have incomes below some level. Another way to look at it is to count how many returns have AGIs that do not exceed 250 percent of poverty level, and make sure that these make up at least more than 90% of the returns.

The poverty level definition changes from year to year, but the official word from the Department of Health and Human services for the years 2007 - 2008 is

We can see that 250% of Income Level depends on Filing Status and number of dependents, and for 2008 for a Single the limit would be $26,000, for MFJ the limit would be $35,000 and for a family of four it would be $53,000.

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