Information and Resources To Claim the Earned Income Tax Credit

The purpose of this article is to bring attention of the Earned Income Tax Credit – both federal and state – to New Jerseyans and to provide links to various EITC resources.

According to national statistics, about 20% – 25% of eligible households do not claim the EITC benefits. Those who go without this income boost can lose out on thousand of dollars in tax credits or refunds. For example, workers who earned too little to be required to file a tax return must complete a return to receive an EITC refund.

EITC outreach material is available from a number of agencies and organizations. They include:

EITC Awareness Day – January 27, 2012

The Internal Revenue Service has declared January 27, 2012 as Earned Income Tax Credit (EITC) Awareness Day. It is a program enacted in 1975 during the Nixon Administration and expanded during the Reagan years. Although technically a tax program, it is considered one of the principal social programs for working families. Nationally, in 2011 over 26 million taxpayers received $59 billion in EITC tax refunds. EITC rewards work and reduces poverty.

An IRS spokesperson recently stated, “If you worked any part of last year (2011) and your income was around $49,000 or less see if you qualify for the Earned Income Tax Credit, or EITC.” It can put extra money in a family’s pocket, up to $5700. In New Jersey in 2011 552,000 households received $1.17 billion via the EITC credit, with an average refund of $2,117. For a single parent with one child it is estimated that EITC effectively raises wages by $1.25 an hour.

An EITC Tax Tip Video makes a number of suggestions. They include:
1) Use free brand name tax software through IRS’ Free File program if your adjusted gross income is $57,000 or less. For details visit the IRS Free File: Do Your Federal Taxes For Free page.
2) Utilize the services of any of the 400 nationwide IRS Taxpayer Assistance Centers to get face-to-face tax help. In New Jersey there are twelve local offices located in Cherry Hill, Edison, Fairfield, Freehold, Jersey City, Mays Landing, Mountainside, Newark, Paramus, Parsippany, Paterson, and Trenton. Visit the link for locations and telephone numbers.
3) Take advantage of local and free tax preparation sites – known as VITA or AARP Tax-Aide sites – during the tax season. For a comprehensive and up-to-date list of New Jersey tax assistance sites visit the NJ 2-1-1 website. To locate the nearest VITA site, call 800-906-9887, if you do not have Internet access. In New Jersey, dial 2-1-1 or 877-652-1148 to find the closest free tax preparation site.

There are a couple tips that I also would like to pass on. They fall into the category of consumer protection and financial literacy. Does it make sense to pay $100 or even $200 to a commercial tax preparer if you can have your tax preparation done for free and get your refund via direct deposit? You should be familiar with the term “rapid refund” and currently known as a “refund anticipation check”. They are nothing more than expensive loans. In the consumer affairs community these services are known as Refund Anticipation Loans or RALs. For a good explanation of how expensive RALs are see a recent National Consumer Law Center report. Fortunately, 2011 may be the last year in the life of these loan schemes.

In the past couple years a number of VITA programs have partnered with financial institutions to enable tax filers to open accounts with the idea of getting a tax refund quicker via direct deposit. New Jersey consumers are fortunate in having available to them low-cost, low-volume basic checking services known as New Jersey Consumer Checking Accounts. If you want to promote financial literacy and encourage consumer education spread the word about consumer checking accounts.

For additional information on tax preparation programs and organizations that sponsor them, visit the New Jersey Community Resources’ NJ Earned Income Tax Credit web page.

EITC Awareness Day – January 28, 2011

Earned Income Tax Credit Can Put Money in Your Pocket

You could be eligible to get more money back from the IRS – as much as $5,666.

If you earned less than $48,362 from wages, self-employment or farming last year, you may qualify for a refundable tax credit called the Earned Income Tax Credit, or EITC. But you must file a federal income tax return claiming the credit to get it.

EITC can be a big financial boost for working people hit by hard economic times. Many individuals who saw their incomes drop in 2010 may qualify for the first time.

The credit has been making the lives of workers a little easier for more than 35 years. Yet it remains little known, possibly because people move into and out of eligibility as their financial, marital and parental statuses change. IRS estimates four of five eligible people claim and get their EITC.

Unlike other tax credits, both EITC eligibility and the amount of the credit is based on several factors such as the source and amount of your income, or combined incomes if married, whether you have qualifying children and how many. Workers without children also may qualify.

The amount of the credit peaks then phases out at certain income limitations depending on filing status and other factors. You may qualify for EITC even if you had no federal tax withheld or are not otherwise required to file.

The credit is complex, but worth exploring. It’s even more valuable if your state has a corresponding tax credit. (New Jersey does have their own.)

The online EITC Assistant at www.irs.gov/eitc can help determine your eligibility and estimate the amount of your credit. Free help preparing your return and claiming EITC is available at volunteer income tax assistance sites and IRS Taxpayer Assistance Centers. To locate a volunteer site, call your community’s 211 or 311 number for local services or call the IRS at 1-800-906-9887. Find an IRS Taxpayer Assistance Center in the blue pages of your telephone directory.

Remember: if you are eligible, you must file a federal income tax return, even if you are not otherwise required to file, and you must specifically claim the credit to get it. Find more information about EITC at www.irs.gov or in your tax software package.

According to the IRS, rural and non-traditional families — such as grandparents raising grandchildren — childless workers, and non-English speaking taxpayers are among those who most frequently overlook the credit.

33,000 New Jerseyans Losing Unemployment in Need of Help

In the past week news articles have reported that nearly 33,000 New Jersey workers are exhausting their extended unemployment benefits. Although we are also hearing about a few positive economic indicators, one of the last one’s to improve is the unemployment rate. The state estimates an additional 3500 to 4000 individuals will be losing their unemployment benefits every week for the balance of 2009.

Where can these individuals and families turn to so they can feed their children or get aid so their utilities don’t get cut off? Aside from temporary assistance programs (medicaid, food stamps, cash assistance, etc. available at county welfare agencies or job seeking services at local One Stop Career Centers which are co-located with the state Employment Service, there are a few other resources or tools that many still don’t know about.

Two valuable but underutilized tools or resources are: 2-1-1 and NJHelps.

2-1-1 is both a telephone number and a statewide database maintained by a partnership of United Way agencies and the state of New Jersey. The system went statewide in 1995 after being piloted in a few counties in 2002. Their website has been supplying information since 1996. Many of us in the social service field are aware that not knowing who or where to turn to can be a very frustrating and emotional experience. 2-1-1 helps to navigate the complexities of the health and social services network. Give them a call or check their website at http://www.nj211.org.

NJHelps is a state run website located at www.njhelps.org that is a self-screening tool for about 28 state and federal programs. It has the potential for assessing -but not actually approving – eligibility for such programs as food stamps, FamilyCare, energy assistance, and cash assistance. It provides additional information in such areas as addiction, child and family programs, employment, food and nutrition, health services, housing, mental health services, and services for the disabled and seniors. Again, the screening tool does not determined eligibility but it can certainly point an individual or family in the right direction.

These tools and programs have been publicized on the New Jersey Community Resources website for a number of years. This website tries to put everything under an easy to navigate roof. For example, on the community resources page is a section known as the Public Benefits Corner which have application forms for many programs all in one place.

Other useful pages on the New Jersey Community Resources website include the following: information on all the state energy assistance programs, how to avoid a utility shutoff, or knowing who is protected under the Winter Termination Program. Other pages help to locate the address or website of their state legislator or members of Congress. It never hurts to let representatives know what is going on.

The Department of Human Services, in an effort to assist the thousands of families who will be seeking help very shortly, has compiled a Quick Reference Guide to Social Services and Housing Resources. Feel free to distribute and circulate this very useful sheet.

For additional information, send an email to: info”at”njcommunityresources.info. (Substitute “@” for “at”.)