How to File for Circuit Breakers

Property taxes can force seniors out of their home.

Circuit breaker is a term that is commonly used to describe tax relief mechanisms that assist low-to-moderate income seniors who may be unable to pay taxes on the current fair market value of their property. Only six of the 31 states that offer circuit breaker programs extend eligibility to low-income citizens of any age. The District of Columbia also has a Circuit Breaker program without age limits. Some states also provide refunds and credits to renters.

Instructions

Local Circuit Breaker Programs

1. Learn about senior tax relief programs available in your state. The staff and fellow seniors at your local senior center are likely to be experts in this area. Talk to as many sources as possible because tax laws are complex and misinformation is commonly spread.

2. Research online to fill in the details and possibly find the forms and instructions that you will need to use in order to file for Circuit Breaker relief. The websites of your state and other local government agencies are likely to be your best sources of information.

3. Note phone numbers that you may need later to help you expand upon what you are able to read online.

Gather the Necessary Documents

1. Document all of your property tax or rental payments with statements and/or cancelled checks.

2. Keep detailed home expense records. This includes utility bills that are sometimes used to calculate your benefit under the Circuit Breaker program.

3. Gather all of your income-related tax documents. This typically includes W-2s, all 1099s, and statements from banks and brokerage houses. Note that even if you are normally exempt from paying income taxes, you may need to file to claim the circuit breaker. Misunderstanding this point is a common reason that many eligible seniors fail to receive Circuit Breaker relief.

Prepare Your Filing

1. Read the instructions carefully and attempt to fill in the forms line by line. This will help you to determine whether you have everything you need. If the form is complex, you may want to consider using software; however, it is always best if you understand what the end result should look like and what information is required. A small mistake in data entry can yield an incorrect answer that software may not be able to recognize automatically.

2. Determine whether you will need help with your filing. Professional income tax preparation may be expensive and the fees can easily wipe out the often small cash payments offered by the Circuit Breaker programs. Fortunately, there are many organizations that offer free or low cost assistance to senior citizens. Your local senior centers are likely to be able to direct you to an appropriate service provider.

3. Consider whether you will file electronically or with a paper form. Generally, e-filed returns are processed faster and yield a quicker payment. Providing your bank account numbers for direct deposit can often shave off additional time. If your circuit breaker program offers a free way to e-file and you have the technical skill or an appropriate assistant, e-filing is your best choice. Beware of "free" online tax preparation software. Typically, these are free for the federal filing only and you have to pay to file the state. Very often seniors have no need to file the federal and are filing the state only to claim a Circuit Breaker credit, making this price structure a poor fit. Be sure you know what your full cost will be, including any extra e-filing charge, before you invest the time in entering your data into desktop or online tax preparation software.

4. Enter your data into your software program or clean form. If you are using assistance, bring your documents to your appointment and you will work with your preparer on this and the remaining steps.

5. Check your results carefully for errors. This includes checking math if you are using a paper form. You should also double check that the numbers you have entered agree with your supporting documents and that you have filled in every line as instructed. If you are using software, it will do some error checking, but you will also need to check for issues that can not be automatically detected.

6. Organize your records for your personal files. You should keep a copy of all of the forms you are filing along with the documents that you used to substantiate your claim. Put them in a file folder or envelope clearly marked with the tax year and store them. You may need these records to resolve issues that arise with your filing.

File your return

1. Mail your paper return or follow your software's instructions for e-filing. If filing paper, the correct address to use should be in the instructions for the forms you are filing. Once you have mailed the return, you are done unless you receive a notice of a problem with your filing. The postmark on your envelope will serve as your date of filing.

2. Check back with your e-filing provider to ascertain that your filing was "Accepted" by the tax agency. Acceptance means only that they have acknowledged that they received your filing and have validated that the data is well-formed. Some minimal substantive checks are made. If the agency has found any problems they will "Reject" it. If this happens, you have not yet filed your forms. You must carefully read the error codes and descriptions and fix the identified problems. This can be difficult and you may need to get assistance from your software provider or the tax agency's support line. If you have attempted to efile close to a tax deadline and your return is rejected, it will be considered filed on time if you correct the issue within a specified time (usually several business days).

3. Wait for a response from the tax agency. In most cases, the response will be payment of the claimed amount. However, if there is a problem, you will receive a letter explaining the situation. These letters may be perfectly clear about the issue or completely cryptic. Read the letter carefully, comply with its instructions exactly. Often the letter will specifically request additional documentation and provide forms to fill out to advance the process. If you are unclear about the next steps or the reasons why your claim has been denied, it is best to call the agency's help line to get more information.

Tips & Warnings

• Although programs such as the AARP Tax Aide program focus on federal taxes, they are staffed by local volunteers who, as specialists in serving the tax needs of seniors, are likely to be able to help with local programs as well.

• You may be able to file for prior year payments that you failed to claim. This may require amending prior year tax returns if you filed them. There are usually time limits that apply, so if you believe that this is possible, do not delay in investigating this option.

References

• Retirement Living Information Center: Taxes by State
• AARP: About AARP Tax Aide