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Countdown to Tax Day

Right now, more than 600 AARP Tax-Aide volunteers are hard at work helping Bay State residents with tax preparation and assistance. As this year’s tax filing deadline – April 15 – draws near, John Woods, volunteer state coordinator for AARP Tax-Aide in Massachusetts, took some time out from his busy schedule to answer a few key questions:

AARP MA:What are some of the important federal tax credits that are available this year?

John Woods:While unavailable to persons age 65 and older unless they have a “qualifying child,” the most important single credit is the Earned Income Credit. This credit, subject to expanded income limits and greater payouts in 2009, may result in tax savings or cash refunds of as much as $5000.

The new American Opportunity Credit expands on the old Hope Credit for education expenses, making it more widely available and increasing the credit amount. Other taxpayers will benefit from an expanded and reinstated credit for energy improvements to their home, and most taxpayers will get the new Making Work Pay credit, worth between $250 and $400.
AARP MA:Are there any particular tax breaks specific to Massachusetts residents?

John Woods:For many taxpayers age 65 and older who rent or own a primary residence, Massachusetts has a credit know as the Circuit Breaker. This credit refunds up to $960 for 2009 rent or property taxes, plus one-half of water and sewer bills, that exceed 10 percent of a taxpayer’s income.

AARP MA:Is Social Security income taxable?

John Woods:Social Security benefits may be taxable depending on your gross income, which includes tax exempt income, and filing status. For most taxpayers with incomes below $25,000 ($32,000 married filing jointly), Social Security will not be taxed. For taxpayers with greater incomes, up to 85 percent of Social Security benefits may be taxed.

AARP MA:How should taxpayers prepare for their appointment with AARP Tax-Aide or their tax preparer?

John Woods:It is important that taxpayers bring all tax documents – W-2's, 1099-INT, 1099-DIV, 1099-R, 1099-G, 1099-SSA (Social Security) as well as purchase price and date of sold stocks or funds. This information may be hidden in year-end brokerage statements or bank statements. Itemizers need to bring evidence of anything they think may be deductible.

Homeowners should bring real estate tax bills, and water and sewer bills paid in 2009. Renters should bring rental receipts and the landlord’s name and address. Everyone should bring their 2008 tax return as it allows us to do a better quality review to assure the return is accurate and no deductions are missed.

About AARP Tax-Aide

AARP Tax-Aide – the nation’s largest, free tax assistance and preparation program, offered by the AARP Foundation – helps taxpayers with basic federal and state tax income returns. It is available to low- and middle-income taxpayers of all ages, with special attention given to those age 60 and older. To find an AARP Tax-Aide site near you, call 1-888-AARP-NOW (1-888-227-7669).

AARP Tax-Aide is administered by the AARP Foundation in cooperation with the Internal Revenue Service. The AARP Foundation is an affiliated, 501(c)(3) nonpartisan, charitable organization established in 1961.