National Earned Income Tax Credit (EITC) day has just passed! Check out what these dollars could mean in the disability community.


With the current economic downturn, the Earned Income Tax Credit (EITC) will be welcome news for many families and individuals. Low-wage workers are apt to be reeling from the added financial pressures they currently face and need to be reminded that the EITC can help relieve some of that pressure.  In addition, there are lots of people who until now, may have been employed in relatively well-paying jobs but have become unemployed.  If they did not work the full year in 2008, there's a chance they could be eligible for the EITC because their income was much lower than expected.  These are people who may never have filed for the credit before and may not even know about it because it never applied to them. 

People who work but don’t earn a lot of money may be eligible for the EITC, as well as free help preparing their tax return. January 30 marked EITC Awareness Day—a nationwide effort to increase public awareness about EITC and free tax preparation sites.

The IRS estimates that 20 to 25 percent of eligible taxpayers fail to claim the credit which could put as much as $4,824 into the pockets of a family with two children, or send as much as $2,917 to a family with one child, or up to $438 for a worker with no children. In the disability community, participation rates are even lower, resulting in an estimated $900 million dollars being left on the federal government’s table.  That could be 900 million dollars directly into the pockets of low-income people with disabilities.  In addition, the credit does not count as income for purposes of Supplemental Social Security (SSI) or any other Federal benefit program.  The credit is not counted as a resource or asset for the nine months following receipt of the money.

The Earned Income Tax Credit, a refundable credit, is the federal government’s largest program benefiting lower-earning workers. This means, if you owe no tax, you get the credit returned to you in a check.  Not only is the credit refundable, but there is a three year look-back provision.  Thus, a single individual who is eligible, but has never filed for the credit could receive over $1,300, while a couple with two children could receive over $14,000.  Know anyone with a disability who could use an additional 1,300 to 14,000 dollars, which is not considered a countable source for the SSI income calculation?

“The extra dollars eligible taxpayers can get through EITC can make their lives a little easier,” said Richard Keeling of the IRS, “but they must file tax returns, even if they aren’t required to file, and claim the credit to receive it.”  Filing a return was also a pre-condition to receive the 2008 stimulus payment.  Individuals and families who did not file in 2008 may have missed out on this additional income ranging from $600 to $1800 for a married couple with two children.  Keeling added that some individuals and families may qualify for the credit for the first time because of unemployment or other changes in their financial, marital, or parental status during the past year. Taxpayers with the earnings of or below $38,646 ($41,646 if married filing jointly) for families with two or more children, $33,995 ($36,995 married filing jointly) for families with one child, or $12,880 ($15,880 married filing jointly) if there are no children, should check to see if they qualify.

The EITC is a valuable but complex tax break. Free help is available to determine eligibility and file to claim the credit at Volunteer Income Tax Assistance (VITA) sites, or for those who cannot visit a site during hours/days of operation, at a local IRS Taxpayer Assistance Center.  To locate a VITA site near you, call 1-800-906-9887 and for more information on where to locate your local IRS Taxpayer Assistance Center, please call the toll free number 1-800-829-1040 or visit www.eitc.irs.gov.

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There is also a new EITC toolkit website for partners located at www.eitc.irs.gov.


Sources:
Internal Revenue Service

Center on Budget and Policy

World Institute on Disability.