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:

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.

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