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.

AARP Tax-Aide

The following bulletin was issued by the AARP Foundation, located in Washington, D.C. The service performed by AARP compliments the work of VITA sites (Volunteer Income Tax Assistance) and IRS’ Earned Income Tax Credit (EITC).

AARP Tax-Aide is the nation’s largest free, volunteer-run tax assistance and preparation service. It is available to taxpayers with low- and moderate-income, with special attention to those age 60 and older. Last year AARP Tax-Aide served 2.5 million taxpayers at 6,500 sites across the country. The sites are located in libraries, community centers, senior centers, and other convenient locations and are open in 2011 from approximately late January/early February to mid-April. The filing deadline in 2011 is April 18.

AARP Tax-Aide provides this free service regardless of age or AARP membership. Volunteers are trained to assist in filing the 1040 tax form and Schedules A, B, C-EZ, D, and EIC. Taxpayers with complex tax returns are advised to seek paid tax assistance. AARP Tax-Aide, a program of AARP Foundation, has been providing a valuable service to taxpayers in communities across the country for over 42 years.

Finding or referring people, to a nearby AARP Tax-Aide site is easy and quick to do. You can either refer people directly to the web site or to a toll free number. Assistance can be located by:

1) Calling 888-227-7669. The toll free site locator number is very easy to use. A caller is asked to enter their zip code either by voice or manually entering it with their phone. They are then given all of the information on the nearest site. They are also given an option for additional sites.

2) Go directly to the AARP web site which allows you to search for the caller by their zip code if they do not have internet access or don’t want to use the web site themselves. Simply go to http://www.aarp.org/applications/VMISLocator/searchTaxAideLocations.action.

Earned Income Tax Credit & Volunteer Income Tax Assistance Sites

Tax season is upon us and free tax sites, VITA sites, have opened their doors. This year several tax credits have been expanded to help put as much as $6,000 in the pockets of low-income working families. In particular, the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) are powerful resources for working people with low incomes.

In 2008, 24 million claimed over $49 billion in EITC credit. The 2009 tax year marks a new year with the American Recover and Reinvestment Act of 2009 (ARRA) which created many new tax policies. Several tax credits have been increased including EITC and the CTC.

Two new credits will put more money in the hands of low-income families including the Making Work Pay Credit and the New American Opportunity Credit which helps low income workers pay for college. With new and existing tax opportunities many more people will quality for benefits than in previous years. To find out more information on EITC visit EITC Central.

Volunteer Income Tax Assistance (VITA) sites are IRS sponsored programs that offer low-income working families (joint income under $49,000) free tax preparation. VITA sites are located across the country and are available so that low-income individuals do not have to pay for tax preparation or purchase products such as Refund Anticipation Loans (RALs). RALs are high-interest loans designed to give tax filers a “quick refund.” RAL interest rates have been reported up to 500% and can ultimately cost the tax filer hundreds if not thousands of dollars. To help protect your clients from these predatory practices encourage them to have their taxes prepared for free at a local VITA site. To find the closest VITA site call: 1-800-906-9887 or visit http://www.irs.gov/individuals/article/0,,id=107626,00.html. New Jersey residents can also access tax assistance sites at the 2-1-1 website to get a list of free tax preparation sites.

With all of the credits available for working families it is critical to promote tax assistance. Over the next several months it is vital to inform your clients about these tax credits and free tax assistance. By visiting the National Tax Credit Outreach Campaign website you will be able to print or order free flyers, posters, handouts, and access to an outreach strategy guide.

Source: Welfare Peer Technical Assistance Network