In 2010, tax credits will mean more than ever for families and individuals, as they struggle with the pressures of a weak economy. Many have seen their incomes decline as work hours are cut or because they have become unemployed. The challenges to meet day-today expenses, avoid utility shut-offs, stay in a home, and stay out of debt continue to grow.

Low- and moderate-income families and individuals need to know that help may be there when they file their federal tax returns in 2010 in the form of tax credits. They also need to know that free tax preparation is available starting Wednesday at The River Center.

This year, more than ever, people need every penny of their tax refunds. This free service, now in its third year, is starting two weeks earlier to help those who have the information to file early.

For the 2008 tax year, The River Center prepared 300 tax returns and brought $400,000 back from the federal government. Of this amount, approximately $160,000 was EITC or Earned Income Tax Credit. This is a non-refundable credit that offers a tremendous benefit to lower- and moderate-income families with children. In 2006, we learned that New Hampshire ranked 50th in the United States in participation for this benefit. We seek to improve that ranking through education and proper tax return preparation.

• For the 2009 tax year, EITC benefits have been increased significantly. The following is a listing of the new Earned Income Tax Credit income limits: One child: $35,463 (single); $40,463 (married filing jointly).

Two children: $40,295 (single); $45,295 (married filing jointly).

Three children: $43,279 (single); $48,279 (married filing jointly).

No children: $13,440 (single); $18,440 (married filing jointly).

• New Earned Income Tax Credit maximum benefits: One child: $3,043

Two children: $5,028

Three children: $5,657

No children: $457 In order to qualify for the maximums, income would have to be in the $15,000 range. A couple filing jointly with three children and income of $47,000 would qualify, but the benefit would be very small.

Tax law changes for 2009 are being called by some as “the most we have ever seen.”

Here are some examples that might help our taxpayers: • Personal exemption increased to $3,650 • Standard deductions are increased to $5,700 for single filers, $8,350 for head-of-household, and $11,400 for those married filing jointly.

• Mileage rates are: $.55 per mile for business, $.24 per mile for medical, and $.14 per mile for charitable driving mileage.

• For those on unemployment, the first $2,400 is not taxable income.

• People on Social Security received $250. It is not taxable income.

• Taxpayers who have enough W-2 income will qualify for a Make-Work-Pay non-refundable credit of $400. Married Filing Jointly should get $800.

• If the taxpayer bought a new vehicle, sales tax and excise taxes are deductible.

• Those who pay property tax get a $500 deduction (per person) even if the taxpayer cannot otherwise itemize deductions on Schedule A.

• A new education credit is available for 2009: The American Opportunity Credit. This is a modification and enhancement of The Hope Learning Credit.

• A special rule for 2009 allows taxpayers to re-characterize a traditional IRA and change it to a ROTH. The taxes generated can be spread over two years.

All of the returns prepared at The River Center get e-filed so taxpayers will likely receive refunds in 7 to 10 days. So there is no need for them to submit to Rapid Anticipation Loans (RALs) that are extremely costly.

All of the volunteer preparers at our site must pass three examinations in order to be certified (basic, intermediate and advanced). We are an official IRS-sponsored Volunteer Income Tax Assistance site.

Appointments can be made by calling 924-6800. We are open on Wednesdays from 4 to 7 p.m. and Saturdays from 10 a.m. to 3 p.m.

Larry Schwartz is the volunteer coordinator for tax preparation service at The River Center’s Contoocook Valley Money Matters Coalition, which was formed in 2006 to promote financial literacy in the Monadnock region. Free tax preparation is just one of many services at The River Center in Peterborough.