Free Community Tax Clinics A Guide to Starting Your Own Clinic

Transcription

1 Free Community Tax Clinics A Guide to Starting Your Own Clinic Written by: Christine Seaver, Project Developer Opportunities Waterloo Region June, 2013 ISBN #

2 Table of Contents Would you like to start a free tax clinic in your area?... 2 Connect with the Canada Revenue Agency... 3 Choose what type of clinic you want to run... 4 Space/resource requirements... 5 Choosing when to host your clinics... 6 Volunteers... 6 Before your clinic starts... 7 During your clinic... 9 Finishing up Timeline Helpful links/ phone numbers Helpful resources Income Tax Checklist Drop-off Returns Tax Clinic Data

3 Would you like to start free tax clinic in your area? With the growing number of tax-tied benefits that are available, filing one s taxes is not only an obligation, but also the only way to access many government credits. Unfortunately for those living on a low-income, the process of filing a tax return can be prohibitive. For some, going to a professional tax preparer or cash advance company often means the use of funds that could have been used to pay a bill or a week s worth of groceries. For others, it may mean not filing a return at all. Free tax clinics help low-income individuals and families to file their taxes in a safe and affordable way. These clinics also benefit the greater community since patrons who receive their tax refunds and government credits will spend it within the community, thereby contributing the local economy. Recently, clinic hosts in Waterloo Region collaborated to increase the capacity of the tax clinics in the community. Working with many of the community organizations who hosted free tax clinics in 2012, Opportunities carried out an evaluation to ascertain the financial benefits of hosting these services. The results found that clinics in the area assist members of the community to receive over $4,000,000 in refunds and benefits yearly. The reasons for starting a free tax clinic are therefore quite obvious; however, the process may feel daunting to those who have never hosted one. This guide will lead you through the steps as well as provide you with valuable resources to help you to start up your own tax clinic. 2

4 Connect with the Canada Revenue Agency In order to host a free tax clinic, you first need to register your organization as a community partner with the Canada Revenue Agency s (CRA) Community Volunteer Income Tax Program (CVITP). As a partner organization, you will be responsible for acquiring your own volunteers, and scheduling and hosting your own clinics. For the times when these should be done, please refer to the Timeline on page 12.The CRA will support you by providing you with free tax preparation software and training on how to use the software for your volunteers. To register in the CVITP, go to the CRA website to the Community Volunteer Income Tax Program page ( Click on the Want to become a community partner? link and register your organization as a community partner; soon after you will be connected with the CRA coordinator for your area. As a community partner in the CVITP program you have flexibility regarding the neighbourhood or population you serve, the eligibility criteria you use and the capacity of your clinic. As a basic standard for eligibility, the CRA recommends the following criteria * : Taxpayer status Individual or Family income Single person up to $30,000 Couple up to $40,000 One adult with one child up to $35,000 Volunteers with the CVITP program should not prepare tax returns for complex situations such as: returns for deceased persons; individuals who file for bankruptcy; self-employed individuals; individuals who report capital gains or losses; or individuals who report employment expenses, or business or rental income and expenses. * The recommended income criteria is subject to change with inflation. Updated criteria can be found on the CRA website. 3

5 Choose what type of clinic you want to run All tax clinics look different and there is no one right way to format them; however, there are three basic models that can be used either on their own or concurrently. Each model has its advantages and disadvantages, so select the one(s) that would work best for your site. By-Appointment In this model, clients are required to book appointment times to meet with a volunteer to prepare their tax return. It is recommended that these appointments are booked in time slots of about half an hour or 45 minutes, to ensure enough time for the volunteer to complete the return. The advantage of this model is that you have relative control over the number of people coming to your clinics to have their return processed. This model requires more time and planning though, since someone will need to schedule the appointments and make reminder calls. Even with this preparation, there is still a chance that clients will not show up for their appointment time. Drop-In The Drop-In clinic is open for a set period of time. People can come in with their documents at any point during the clinic hours and be served on a first-come basis. This type of clinic should be able to accommodate a waiting area that is separate from where the returns are processed. This model requires less administration, and it is more flexible for your clientele; however, because appointments are not booked ahead of time, you cannot be sure of how many people will patronize the clinic. Depending on the number of people that attend, your volunteers could be overwhelmed by having too many people or become bored or frustrated if they have nothing to do. Also, in cases where the clinic is very busy, clients may have to wait a long time to have their return processed. Drop-Off Here, the client s information and documents are collected to be processed at a later time. This method works quite well when used concurrently with one of the other models. Volunteers can collect drop-offs during busy times (and outside of the clinic hours) and process them during quieter periods of drop-in clinics or during cancelled appointment times. It is important to note that a volunteer is needed to assist the person dropping off their return to ensure that all necessary documents and information are provided. 4

6 The advantages to this method are its flexibility and how it can support the other two types of models. However, one must be careful while using this method as volunteers cannot ask questions of the clients and therefore important documents and information can be missed. Also, because the clients leave their documents with the tax clinic hosts, there is a risk that those documents can be lost, stolen or that the client will not pick them up after the return is completed. Precautions such as storing documents in a locked cabinet, getting accurate contact information and reminding patrons on the importance of keeping their information should be taken to prevent these issues. Space/ resource requirements Tax clinics are a relatively inexpensive and simple service that you can provide to your community; however, there are a few things that are required to ensure they run well. Depending on the type of clinic you choose, there will be a few different requirements. Listed are both the general requirements and those for the specific types of clinics. General needs Space to process the tax returns where there is privacy, a power source, and access to a printer and the internet A separate space for those waiting to have their return processed Computers (enough for each volunteer processing returns during a clinic) Internet connection Printer (with ink and paper) Encrypted USB sticks * for each volunteer (you can use standard USBs and install encryption software or purchase ones with it already installed) Pens, scrap paper By appointment clinics only Phone (to make reminder calls) Appointment schedule Drop-off clinics only Envelopes to keep forms/ receipts in Locked cabinet to store documents * An encrypted USB stick is a USB stick that has software on it to encode information stored on the drive. Users can create a password-protected vault on the USB which is used to store documents in a secure manner. 5

7 Choosing when to host your clinics When choosing the dates/times for your tax clinic(s) be sure to consider your needs as a host site as well as the population you will be serving. For some hosts a full-day program works well, while some prefer a couple hours every week throughout tax season or throughout the whole year. Others prefer to collect drop-off returns during the regular hours that the host is open and have volunteers process them when they have time after hours. Some questions to ask yourself include: Do evenings work or are days better? Can you only do one session or multiple? Do you have access to space at that time? How many volunteers will you have? What times can your volunteers commit to? Will the tax clinic patrons be able to come on that date/time? If you are planning on hosting a drop-off clinic it is also important to decide when you will stop accepting drop-off returns. You may want to stop accepting them a few days before the end of April to ensure that you able to process all of the returns before the final day of tax season. Volunteers Volunteers are fundamental to the success of your clinic, so get them early! How many you need is dependent on the size and number of clinics you hold. These volunteers do not have to be accountants or have any experience preparing tax returns. The registration period for volunteers in the CVITP program is between October and January. Once a volunteer has agreed to prepare tax returns in your clinic, they must register themselves as a volunteer for your clinic on the CRA website ( under the Lend a hand! Become a tax volunteer tab. If they are already registered with another clinic for the tax year, they can volunteer at your clinic without registering again. Once they are registered, you will be given T242 forms by the CRA coordinator for each of your volunteers to fill out and sign. This form gathers information about the volunteer as well as serving as an agreement that the volunteer will follow the rules of the CVITP. 6

8 Also at this time they should register for an e-file license. It can take 30 days for the e-file licence to be approved, so encourage your volunteers to do this early. Registration for the e-file licence is on the CRA website as follows: If the volunteer is new to e-file: If the volunteer had an e-file licence the previous year, they just need to renew it at: You may also need some help for the clinic that does not include the preparation of tax returns (booking and reminder calls for appointments, assistance for those handing in dropoff return to ensure all of the necessary documents and information are submitted, etc.). These staff/ volunteers do not need to register with the CRA if they will not be preparing any returns. Before your clinic starts There are a few additional things do before your clinic s start date: Advertise Download software Volunteer training schedule volunteers Forms and client resources Reminder calls (by appointment only) Advertising your clinic Whether you choose to provide the tax clinic for just your neighbourhood, or open it up to the larger community, you will need to advertise your clinic in some way. This can be done through posters, newsletters, word of mouth etc. If you are willing to open your clinic up to the larger community you may want to post your clinic information on the CRA website, your own website and the community tax clinic listing website (if your community has one; One example of a community web-site is found at: Information that should be included: date(s), time(s), location, eligibility requirements, if they need to book an appointment and contact information. 7

9 The CRA can provide promotional materials if you would prefer this to creating your own. Just ask your local coordinator what materials they can offer. Download the tax preparation software The tax preparation software for the CVITP program is provided by the CRA. It is simple and easy to use. Your CRA coordinator will connect with you and provide you with options on how you would prefer to receive this software. You will need to download onto each of the computers used for the clinic. The CRA also provides software for previous year returns if you interested in processing them for your tax clinic patrons. * Volunteer training The CRA s CVITP program provides training via webinar. These training sessions are available for beginners and return volunteers. They provide some basic information as well as update volunteers on any tax changes. They even offer some sessions that are customized to the tax filing needs of specific groups of people (e.g. students or seniors). These training sessions are not made mandatory by the CRA, but are highly recommended. It is your choice if you want to make training mandatory for your own clinic. You can request your volunteers to do the training independently or can arrange to do it together as a group. You will also want to contact your volunteers individually or hold an information session for them (especially if you have many volunteers) so you can orient them to the details of how your clinic will operate, outline their roles and responsibilities and answer any questions they may have. Schedule volunteers This again depends on the type of clinic you are hosting, your available space, the number of volunteers you have, and of course, the volunteers availability. Make sure to consider who will be hosting/directing the tax clinic clients and who will be processing returns. You will also need to consider and be prepared for instances where a volunteer is sick or otherwise unable to show up for their scheduled time. * Even with the software, you cannot e-file previous year returns. To file previous year returns you must print the Federal Tax Return pages and mail them to the CRA. 8

10 Forms and Client Resources It is helpful to create and distribute an information sheet that participants can use as a reference for what they will need to bring to the clinic. You may want to highlight important slips or receipts that relate to the specific population to which you are catering to help them get all the credits available to them. A sample is included in the Helpful Resources section of this guide. If your clinic is collecting drop-off returns, you will also need to create a form for the participant to provide other information that is not listed on their tax slips, but is still needed for processing their return (birth date, marital status, dependents, etc.). You will also need to include with this a copy of the TIS60 form (for each member of household over 18 years of age). A sample form is provided in the Helpful Resources section. Reminder calls (by-appointment only) Reminder calls are very important for by-appointment clinics. They help prevent patrons from forgetting their appointment and will give you notice if a patron decided to cancel their appointment. Even with a reminder call, you should expect that some people will still not show up for their appointment. During your clinic The day has arrived for your first clinic! Be sure to set up early and be well prepared before the clinic starts. Some common things to check before the clinic opens: the software is properly installed and running smoothly the printer is connected and working every computer is connected to the internet all tax preparing volunteers have their e-file numbers and passwords handy everyone knows how to use their encrypted USB key If your volunteers are new to tax preparation it is beneficial to have someone available to support them / take their questions. Plan to give novice volunteers more time for their first five to ten returns as they will still be learning how to process returns and use the software. Simple returns can take only minutes for an experienced volunteer to complete; however, for someone who has never done a return before, it can take up to an hour. 9

11 Hosting Whether it is your regular reception staff at your organization or a volunteer specifically engaged for the tax clinics, you will want to have someone available to welcome and direct the people coming in to use the tax clinic service. This can be as simple as informing the patrons to sit in the waiting area until a tax preparing volunteer comes to help them or as involved as being able to answer tax questions and collect drop-off returns. E-Filing E-filing is highly recommended by the CRA as it allows for less of a chance for errors in the processing of the return or the return getting lost in the mail. It is also enables the participant to receive their refund/ benefits much faster. You will need to have an encrypted USB for each computer being used or for each volunteer, even if you are e-filing the returns right away. The e-filing process requires you to save the return and this should not be done on your hard drive for security and confidentiality reasons. The encryption software on the USB should allow you to create a password protected vault where you are able to easily save and access the file. Even with the encrypted USB, you should still delete the file within 48 hours of processing it. Form TIS60 (The CVITP Authorization Form) This form must be completed with every person whose return is processed within the tax clinic. The first section of the form states that the taxpayer has authorized the volunteer to process their tax return. The second section must be completed if the volunteer will be e- filing the return. Once this form is completed and signed, the tax clinic patron keeps it for their own records. Finishing up As you finish up your tax clinics for the year there are a few things to do/ consider: Tax return information It is extremely important that all personal information and tax documents be returned to the tax clinic participants. This can be a challenge with drop-off returns at times, so be sure to stress that the participants need to go back to the clinic to pick up their information. Also, if 10

12 this has not already been done, all copies of the client s tax returns should be deleted from the encrypted USBs. Software If you are planning to host tax clinics again in the future, it may be a good idea to keep the tax preparation software on the computer(s). This software can be then be used to prepare previous year returns in the following years. Ongoing tax clinics Most tax clinics run only during tax season; however, some do choose to offer extended tax preparation services. If you wish to offer extended services you can maintain the same format as your clinic during tax season or provide limited services on an as-needed basis. Keeping statistical data The CRA asks volunteers to keep a record of the number of returns they prepared throughout the season. Volunteers can easily track this information with the Form T1176 which the CRA coordinator will provide. You may also want to collect data for your own records. This can be as basic as recording the number of people that attended your clinics or as involved as collecting information such as marital status, the general neighbourhood where people reside (by using the first three digits of their postal code), the amount of their refund, and amounts for available tax benefits (e.g. HST credit). All of the more detailed information can be collected after each return or at the end of each clinic. It is extremely important that names and addresses are not included in this data collection for confidentiality reasons. For an example data collection sheet refer to the Helpful Resources section of this guide. 11

13 Timeline Here is a basic timeline to guide the preparation of your tax clinic: September October November December January February March April Spring - Fall Decide to hold tax clinic Decide on type of clinic Register host site with CVITP Engage volunteers Volunteers register with CVITP program, get e-file license Train volunteers Software provided Advertise clinics Tax Season Ongoing clinic (if decide to offer) Collect statistics; statistics to CRA and for own use 12

14 Helpful links/ phone numbers CRA website E-file home - E-file Help Desk Contact Information - Individual Income Tax Enquiries Canada Child Tax Benefit GST/HST Credit Enquiries Helpful resources Income tax checklist Drop-off returns participant information form Statistical information data collection sheet For Waterloo Region: 13

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16 Income Tax Checklist Your tax return can only be completed properly if you bring all of the necessary documentation with you to the clinic. The following list will help you prepare for having your return completed. Please bring all of the necessary information as it applies to your situation: 1. A copy of your 2011 income tax return or volunteer summary, and your 2011 Notice of Assessment (if possible), your social insurance number (SIN) and your spouse s SIN 2. A list of your dependants and their exact dates of birth, and their SINs, if they have one 3. Information Slips T4 - Salary and wages T4A, T5, T3 - Pension, annuity and investment income, Canada/Ontario savings bonds T4(OAS) - Old age security/ Guaranteed income supplement or spouse s allowance T4A(P) - Canada Pension Plan T4RSP, T4RRIF - Registered retirement savings plan/registered Retirement Income Fund T4E - Employment insurance benefits T Social assistance payments/ Worker s compensation benefits RC62 - Universal Child Care Benefit IF YOU RECEIVED A LUMP-SUM PAYMENT, bring the breakdown statement from the payer 4. Receipts for expenses and credits Child care expenses and a completed T778, if you have one Child support payments Union dues Tuition fees and education amount (T2202A) Medical expenses Charitable/political donations All property taxes or rent paid Public transit passes 5. Other Details of spouse s and dependant s income Date of arrival to Canada and status (if a new immigrant) Proof of payment to non-resident dependants Direct deposit information (void cheque/letter from the bank/credit union with your bank information) Any other documentation that may pertain to your income taxes Unfortunately, we can NOT complete Income Tax Returns for individuals who are: Deceased Filing for bankruptcy Self-employed Reporting capital gains/losses Have rental income Reporting employment expenses 15

17 Drop-off Returns Participant s Information First name: Last name: Phone number: Address Apt. City: Postal code: Social Insurance Number: Date of birth: (day/month/year) Gender: Male Female Is this your first tax return? Yes No Are you a Canadian citizen? Yes No Are you new to Canada in 2012? Yes No Marital status: Single Common law Divorced Married Widowed Separated Has your marital status changed in 2012? Yes No If yes, date of change: Spousal information First name: Social insurance number Gender: Male Female Is this your first tax return? Yes No Are you a Canadian citizen? Yes No Are you new to Canada in 2012? Yes No Dependants (attach another page if additional dependants): Last name: Date of birth (day/month/year) 1. Name (first, last): Relationship: Social Insurance Number (if have): Date of birth: (day/month/year) 2. Name (first, last): Relationship: Social Insurance Number (if have): Date of birth: (day/month/year) 3. Name (first, last): Relationship: Social Insurance Number (if have): Date of birth: (day/month/year) As a Canadian citizen do you authorize the Canada Revenue Agency to give your name, address and date of birth to Elections Canada to update the National Register of Electors? Yes No 16

18 Tax Clinic Data Marital Status First 3 digits of postal code # of Dependents (under 18) Anticipated Refund Balance Owing GST total Trillium total (Ontario) Child tax benefit total 17