Tag: EITC

Help With Tax Preparation

The Earned Income Tax Credit -EITC – is perhaps the best safety net program I’ve ever known. Actually, it is part of the tax code. Nonetheless, I have written about it in nine of the past twelve years in this blog. This year I’ll try to keep it simple.

Millions of taxpayers don’t get an EITC credit for a number of reasons. They don’t know about it, they are perhaps paying income tax for the first time, or because tax preparation is way too complicated or expensive.

There is free tax software, if you read the fine print. Remember, the devil is in the details. Here are a couple tax assistance programs and how to access them. The first is Free File, a partnership between tax software companies and the IRS. This is the fine print you will read on the Free File website:

IRS Free File lets you prepare and file your federal income tax online for free. File at an IRS partner site with the IRS Free File Program or use Free File Fillable Forms. It’s safe, easy and no cost to you for a federal return. 

To receive a free federal tax return, you must select an IRS Free File provider from the Browse All Offers page or your Online Lookup Tool results. Once you click your desired IRS Free File provider, you will leave the IRS.gov website and land on the IRS Free File provider’s website. Then, you must create an account at the IRS Free File provider’s website accessed via Irs.gov to prepare and file your return.  Please note that an account created at the same provider’s commercial tax preparation website does NOT work with IRS Free File: you MUST access the provider’s Free File site as instructed above.

The other is MyFreeTaxes. United Way provides MyFreeTaxes in partnership with the IRS’s Volunteer Income Tax Assistance (VITA) program.

Local, county, and state government need to do more to spread the word. A number of organizations provide outreach tool kits to enable effective outreach campaigns. Let’s reach those who need the help the most. Participate on EITC Awareness Day, the last Friday in January.

There is a conspiracy that prevents tax filing from being easy. K Street lobbyist prevent IRS from sending out partially-prepared tax forms to each taxpayer. Do a web search: “lobbyist oppose free IRS tax software”. Write your Members of Congress to ask why.

My Earned Income Tax Credit page has been updated for the 2021 tax season to include up-to-date EITC income-eligibility guidelines plus links to programs mentioned above.

EITC, Vita Sites And Free File

The Earned Income Tax Credit (EITC) is a refundable tax credit for families and individuals who have income from employment. It increases the amount refunded to a taxpayer or reduces the amount of tax owed. You must file a tax return to claim your EITC.

Twenty-eight states, including New Jersey, maintain their own state EITC program. New Jersey taxpayers may receive a credit equal to 37% of their federal credit. It is based on their employment earnings, filing status, number of children and adjusted gross income (AGI).

Income Limits and Maximum EITC Credits
Number of Qualifying Children Single/Head of Household or Widow(er), Income Must be Less Than Married Filing Jointly, Income Must be Less Than Maximum Federal Credit Maximum NJ State Credit
No Child $15,270 $20,950 $519 $192
One Child $40,320 $46,010 $3,461 $1,281
Two Children $45,802 $51,492 $5,716 $2,115
Three or More Children $49,194 $54,884 $6,431 $2,380

Free assistance to prepare and file your federal and state income tax returns are available from a number of organizations and programs, including a United Way listing of New Jersey VITA Sites. You can also access the IRS VITA Site Locator Tool. Free, easy to use online software is available to taxpayers with an Adjusted Gross Income of $66,000 or less through the Free File program.

The EITC Assistant is an online tool to help determine if a family may qualify for EITC by answering a number of questions. The IRS also publishes a one page fact sheet, IRS Notice 797 and a forty page booklet on EITC, IRS Publication 596.

Employers, have you told your employees about the Earned Income Tax Credit? If not, distribute copies of IRS Notice 1015. The New Jersey Division of Taxation also publishes a Statement to Employees with helpful links and phone numbers.

Nonprofits, advocacy groups and government agencies can participate in outreach efforts by distributing the Division of Family Development’s NJ 2018 EITC Flyer which is included on their EITC page. Groups interested in conducting an outreach campaign or promoting EITC on social media should subscribe to the Center on Budget and Policy Priorities’ Get It Back Campaign.

Another option is to download IRS2Go, the official IRS mobile app. You can use it to check the status of your tax refund or find free tax prepartion services, etc.

Philadelphia Area and South Jersey residents can find free tax site locations by visiting the
Campaign for Working Families website.

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: