Don't Leave Tax Refunds on the Table: Understand, Use EITC
3/11/2013, 8:09 p.m.
The earned income-tax credit cuts your federal income tax and can get you as much as a $6,200 tax credit this year if you're in the low- to moderate-income bracket.
And the District of Columbia, Maryland and Virginia gives residents the credit on state income taxes, too.
Unfortunately, as many as a fifth of eligible District households fail to claim these credits. The D.C. Fiscal Policy Institute estimated recently that from 13 to 18 percent of eligible households do not claim federal benefits, losing $12 to $18 million. .
Residents who do not claim the federal credit cannot apply for the D.C. tax credit, meaning they lose another $4.5 to $6.6 million a year. So altogether District of Columbia households could be losing as much as $25 million a year in tax benefits.
That money could come in handy for people of modest incomes right now. Each year the time from January through March always presents financial challenges for many families.
Thanksgiving, Christmas and New Year's often leave people short of cash just as winter's utility and clothing costs rise. That's why many households struggle financially until tax refund checks come in. While relying on income-tax refunds is a risky approach to household budgeting, they are sometimes the only way for hard-pressed families to get back on budget after the lean winter months.
Individuals who earn a maximum of $35,000 are eligible while for families the maximum is $51,000. The credits are larger if you have children who qualify under the program. You must file a tax return with the IRS to receive the credit - even if you owe no tax or are not required to file.
To learn more about the Earned Income Tax Credit, or EITC, you can go to the DC EITC Campaign, which brings together private- and public-sector organizations and volunteers to educate consumers about the EITC. It is supported by Capital Area Asset Builders, whose mission is to "put people on the road to financial independence," and Community Tax Aid, which charges nothing to help people do their taxes.
The campaign works with the Internal Revenue Service to promote free tax-preparation assistance through the Volunteer Tax Assistance Program, which provides information on EITC and other tax benefits, including education, first-time homebuyer credits and deductions for pension benefits.
The DC EITC campaign also needs volunteers as client coordinators, volunteer tax preparers, interpreters and tax-return quality reviewers.
To learn more about the credit, contact the campaign at email@example.com or call 202-419-1440.
For more information on volunteer opportunities, email firstname.lastname@example.org or call 202-419-1440.
Do not leave on the table valuable financial resources intended to help people of modest means make ends meet.