IRS begins new push to publicize tax credit
The IRS wants you — to know about the Earned Income Tax Credit.
The Internal Revenue Service has launched a massive marketing and information blitz to get the word out about the refundable tax credit for low-income workers and families.
At least 85 news conferences are being held, while another 93 organizations are putting out news releases, all tied to the deadline for employers to send out the W-2 forms that people need to file their taxes. And numerous free tax preparation services are being launched.
More than half of all EITC claims are filed in February, and the government wants to make sure that thousands of eligible taxpayers don’t miss out and leave behind money they’re eligible to collect.
“We want every taxpayer in America to be aware of it. We want people to know is that this program is available,” IRS Commissioner Doug Shulman said on a teleconference. “It’s generally not the complexity that keeps people from this. It’s just general awareness.”
The agency called the credit a “critical financial lifeline for many Americans this year,” noting that the recession and job losses may have reduced many people’s incomes.
This year, the EITC program will refund up to $4,800 in cash back to those who qualify, even if they didn’t have to pay any taxes. Last year, nearly 24 million taxpayers collected $48 billion from the EITC — money that could be saved for future or used to pay urgent bills or otherwise supplement other income. The average was $2,000.
“Many Americans experienced financial hardships last year. People may be eligible for EITC for the first time and really should check out their eligibility,” Shulman said. “This is a significant credit that can make their lives a little easier.”
For the 2008 tax year, the federal credit tops out at $4,824 for a family with two or more children. For a family with one child, it’s $2,917, while childless taxpayers will get $438.
To collect the credit, taxpayers must have earned income from a job, must be a U. S. citizen or resident alien, must have a valid Social Security number and must file a tax return.
Earned income and adjusted gross income must be less than $38,646 for a family with two or more children, or $41,646 if “married, filing jointly.” With one child, the limits are $33,995, or $36,995 if filed jointly. With no qualifying children, it’s $12,880, or $15,880 if married filing jointly. You can’t collect the credit if you file as “married filing separately.”
Unemployment benefits are considered in calculating adjusted gross income, but not earned income. But the family also cannot have more than $2,950 in investment income.
The rules and required forms can be complex, so the agency and a host of both business and nonprofit partners are prepared to help.
This year, more than 12,000 Volunteer Income Tax Assistance (VITA) sites will be operated by partner organizations nationwide, answering taxpayer questions, determining eligibility for the credit and even providing free tax preparation services to those who qualify. The sites are open not only to low-income people but also to seniors and certain other eligible taxpayers.
For example, locally, the Creating Assets, Savings and Hope (CASH) Coalition, an initiative of the United Way of Buffalo and Erie County, initiated its service late last month with its Cash In Saturday event. University at Buffalo accounting students are also providing assistance on 16 days over the next three months.
And KeyBank is hosting simultaneous “Super Refund Saturdays” in 14 cities, including Buffalo, where it’s partnering with the IRS, Belmont Shelter and CASH. Last year, the bank helped low-income taxpayers get an average of $2,000 per return. Locally, the event will be from 10 a. m. to 2 p. m. Saturday at Belmont Housing Resources, 1195 Main St.
Additionally, the IRS itself will also operate 400 Taxpayer Assistance Centers nationwide — including 172 that will be open special hours Saturday and on Feb. 21.
Created in 1975 in part to offset the burden of Social Security taxes and provide an incentive to work, the EITC is the government’s largest tax benefit program for working individuals and families. Some states, including New York, also have state programs. The exact amount of the credit varies based on earned income from a job and family size.
In part because of that complexity, about 25 percent of eligible taxpayers typically do not claim the credit they are entitled to, according to IRS research. Those include taxpayers who have earned income but aren’t required to file a return because they don’t make enough money. Also missing out are non-English speakers, “non-traditional” families, the homeless, workers without children and rural residents.
But they may qualify, officials noted. People over age 65, normally not eligible, may qualify if they are raising a grandchild who meets certain requirements. Workers without children can still get some money, though not as much. And military families can leave out combat pay when calculating earned income.
Taxpayers who were eligible in past years but did not claim the refund then can also file amended returns for up to three years back.
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