Promoting The Earned Income Credit

Marijo Upshaw, Leader of Financial Services at Goodwill Industries of NCW, discussed how the Earned Income Credit (EIC) is a Federal tax benefit for low income working families and individuals to offset income and payroll tax supplement wages. This was meant to be an incentive for people to work as an alternative to public assistance and welfare. About 20% of all individual filers and 27 million households claim EIC which is about $59.2 billion in claimed credits. EIC and the Child Tax Credit lift more than 9 million people above the poverty line. Persons who receive these credits are spending the money in the community and helping our local economy. EIC is based on your earned income, marital status and number of dependents. Earned income comes from wages, salary, tips, self-employment, union strike benefits, military combat pay and employer paid disability. It does not include public benefits. Besides the Federal EIC, there is a Wisconsin EIC. To qualify for the State of Wisconsin EIC, you must qualify for the Federal credit and be a full-time resident. There is no credit for persons who do not have qualifying dependents. In order to claim the EIC, you must file a tax return (Form 1040 or 1040A) and if you have dependents you must file a Schedule EIC. Eligible workers can claim EIC or Child Tax Credit refunds for up to 3 previous years. Outreach for this program is needed because 20-25% of people who qualify for the EIC do not claim the credit. This results in up to $10 billion per year. Those that might miss out of EIC include workers not required to file a tax return, workers just entering the labor force, new parents, divorced or separated custodian parents and workers newly eligible due to a reduction in income or loss in employment. About 70% who can claim EIC go to a commercial preparer. Some of these preparers offer Refund Anticipated Loans or Refund Anticipation Checks which charge fees and can drain a person’s income. Goodwill has been doing taxes since 2004 for low-income individuals, individuals with disabilities, non-English speaking tax payers, and the elderly (generally, household income under $57,000). If you would like more information or to volunteer for the Volunteer Income Tax Assistance program (VITA), visit their website at: http://www.filetaxes4free.org/.