How I’ve benefited from the tax code (and you can, too!)

April 11, 2023
by Gabe Hafemann

With the April 18th deadline to file federal income tax returns coming up, taxes are on people’s minds. As I get my forms together, it has me reflecting on my experiences. The first time I filed for myself, I was 20 years old and living in Wisconsin. I had just dropped out of college and was working two jobs. I knew I had to file a return, but I wasn’t sure where to start. I went to the library for guidance. The librarian pointed me to an online filing service and some forms I’d need. I was anxious trying to figure it out. It was a complicated, opaque process. Like most people, I stressed about it. Would I get audited? Penalized? Owe money in or receive a refund? The whole thing felt overwhelming. 

Two years later, in 2017, I moved to Minnesota. I started to experience firsthand the difference that state tax code variations make. I learned more about taxes — both state and federal — from my partner’s parents (lifelong Minnesota residents), including how to access and benefit from the Minnesota Renter Property Tax Refund. It is a type of tax credit that functionally helps subsidize the prior year’s rent, and it was fairly easy to file for with just one short form. That’s especially important for people who are just trying to keep living where they already do instead of moving again and again to chase more affordable rents. 

Around this time, I also learned about and qualified for the federal Earned Income Tax Credit (EITC). The EITC functionally reduces what you owe in taxes. It is available to those earning an annual income below $60,000. As a ‘single’ person without dependents, I received a $560 credit. States often have an EITC equivalent of their own that all work differently. Minnesota’s state EITC is called the “Working Family Credit” and, even without kids, I qualified. These two tax credits allowed me to build up some savings outside of my budgeted income. 

The next year, in 2018, I returned to school. Come tax time, I learned from the Student Aid office about the American Opportunity Tax Credit (AOTC). The AOTC gives students up to $1,000 back in refundable credit for the tuition they pay. After a few years’ experience filing tax returns, I pulled together all the forms needed to get the AOTC, EITC, and Renter Property Tax Credit. Between working three jobs and being enrolled as a full-time student, I received a pretty substantial refund. I put it in savings. Together, two years’ tax refunds offered me a real safety net and some flexibility to take unpaid and lower-paying internships to advance my future career opportunities. Learning about tax credits took time and effort, but ultimately, they’ve provided major material benefits. 

Moving to Minnesota and accessing their tax state credits were huge for me, financially and professionally. The benefits of crossing a single state line shouldn’t have been so significant. Establishing a federal Renter Tax Credit would make that rent relief available nationwide. Rent relief is especially urgent now as housing cost burden has increased across the country, incomes stagnate, and inflation has rendered life more expensive overall. Most folks must file taxes whether or not they’re getting credits. Even if it’s intimidating at first, a Renter Tax Credit has lower barriers to entry than other rental/housing assistance. Other programs tend to have higher bureaucratic burden, but a federal Renter Tax Credit would put cash in people’s pockets for the taxes they already have to do, and the rent they already have to pay. Landowners, homeowners, and developers already take advantage of several tax credits — there’s no reason that renters shouldn’t get one, too. 

In 2023, the IRS mandates that if you have an Adjusted Gross Income of $73,000 or less, you can file for free. RESULTS isn’t an accounting firm and this doesn’t constitute legal advice, but I can tell you that the IRS Free File website has resources for folks making under that threshold:

Gabe Hafemann (they/them) is a current Bill Emerson National Hunger Fellow with the Congressional Hunger Center. Originally, they come from La Crosse, WI but have called Northeast Minneapolis, MN home since 2017. 

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