Earned Income Tax Credits Help Low-income Taxpayers
By Regis P. Bodnar, Senior Tax Specialist, Internal Revenue Service
Overview:
With tax season approaching, it's time for low-income taxpayers in northwestern Pennsylvania to file away some important information about Earned Income Tax Credits (EITC).
Originally approved by Congress in 1975, EITC has become our nation's largest and most important anti-poverty program. Designed for people who earn low-to-moderate incomes, the program can result in a tax refund for those who claim and qualify for the credit.
In 2004, for example, 20,877 taxpayers in Erie County received an average refund of $1,743 on their federal tax returns through the EITC program. That is well in excess of $36 million
The General Accounting Office, however, estimates that up to 25 percent of taxpayers eligible for the tax credit failed to claim it on their returns. Using the 2004 statistics, it means nearly 7,000 taxpayers in Erie County qualified for EITC but did not receive the credit. That is over $12 million in unclaimed refunds.
The EITC has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF) payments.
Promoting Awareness:
Family Services of Northwest Pennsylvania, with support from the Erie Community Foundation and other local organizations such as NWLS, is spearheading the campaign to promote increased awareness of the EITC in Erie County. The campaign also promotes the availability of free tax filing at Volunteer Income Tax Assistance (VITA) sites across the region.
The use of VITA sites will help ensure that low--ncome taxpayers take advantage of all of the tax credits they are entitled to receive, while saving the cost of a paid preparer and a high interest "refund anticipation loan" (RAL).
It is also important to note that of the 26 VITA locations in Erie County last year, ten sites were able to electronically file returns.
Electronic filing of a tax return, coupled with a bank account where funds can be deposited directly, greatly expedites the process of getting your refund from the IRS.
Getting Ready:
While local agencies are working together to promote awareness of EITC, the IRS is joining efforts to encourage low-income residents of northwestern Pennsylvania to apply for the credit. Plans include opening VITA sites as early as possible in January, and to schedule more tax preparers the first weeks of operation to handle heavier demands.
The IRS Web site at www.irs.gov has posted detailed information about the basic requirements in order to apply for EITC, as well as information about using the EITC worksheet to file the tax forms yourself.
The IRS Web site also has an easy-to-use feature called the "EITC Assistant." By answering some simple questions, you can help determine whether you qualify for the tax credit. The assistant also helps determine if you have one or more qualifying children.
NWLS will post the complete list of VITA sites in northwestern Pennsylvania on its Web site, www.nwls.org, as soon as it becomes available.
Overview:
With tax season approaching, it's time for low-income taxpayers in northwestern Pennsylvania to file away some important information about Earned Income Tax Credits (EITC).
Originally approved by Congress in 1975, EITC has become our nation's largest and most important anti-poverty program. Designed for people who earn low-to-moderate incomes, the program can result in a tax refund for those who claim and qualify for the credit.
In 2004, for example, 20,877 taxpayers in Erie County received an average refund of $1,743 on their federal tax returns through the EITC program. That is well in excess of $36 million
The General Accounting Office, however, estimates that up to 25 percent of taxpayers eligible for the tax credit failed to claim it on their returns. Using the 2004 statistics, it means nearly 7,000 taxpayers in Erie County qualified for EITC but did not receive the credit. That is over $12 million in unclaimed refunds.
The EITC has no effect on certain welfare benefits. In most cases, EITC payments will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most Temporary Assistance for Needy Families (TANF) payments.
Promoting Awareness:
Family Services of Northwest Pennsylvania, with support from the Erie Community Foundation and other local organizations such as NWLS, is spearheading the campaign to promote increased awareness of the EITC in Erie County. The campaign also promotes the availability of free tax filing at Volunteer Income Tax Assistance (VITA) sites across the region.
The use of VITA sites will help ensure that low--ncome taxpayers take advantage of all of the tax credits they are entitled to receive, while saving the cost of a paid preparer and a high interest "refund anticipation loan" (RAL).
It is also important to note that of the 26 VITA locations in Erie County last year, ten sites were able to electronically file returns.
Electronic filing of a tax return, coupled with a bank account where funds can be deposited directly, greatly expedites the process of getting your refund from the IRS.
Getting Ready:
While local agencies are working together to promote awareness of EITC, the IRS is joining efforts to encourage low-income residents of northwestern Pennsylvania to apply for the credit. Plans include opening VITA sites as early as possible in January, and to schedule more tax preparers the first weeks of operation to handle heavier demands.
The IRS Web site at www.irs.gov has posted detailed information about the basic requirements in order to apply for EITC, as well as information about using the EITC worksheet to file the tax forms yourself.
The IRS Web site also has an easy-to-use feature called the "EITC Assistant." By answering some simple questions, you can help determine whether you qualify for the tax credit. The assistant also helps determine if you have one or more qualifying children.
NWLS will post the complete list of VITA sites in northwestern Pennsylvania on its Web site, www.nwls.org, as soon as it becomes available.
posted by Access to Justice at 10:57 AM
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