Dollars at Your Door: Extra Money through the Earned Income Tax Credit
The New Year has started with some of the coldest temperatures in recent years affecting everyone’s pocketbooks across the region. Higher heating and transportation costs can make a serious dent in a family’s budget. Plus, most of us are still reeling from holiday expenses. While anticipated income tax refunds help some households make it through spring, many households don’t take advantage of the dollars available through the earned income tax credit.
Simply stated, the earned income tax credit helps millions of low-to-moderate income tax payers keep more of what they earn. When the earned income tax credit exceeds the amount of taxes owed, a refund is provided to those who claim and qualify for the benefit. The credit basically reduces the amount of tax you owe which may result in a refund. District of Columbia, Maryland and Virginia residents can claim the tax credit on both their federal and state income taxes. However, there are rules that govern the process for claiming the tax credit. For the 2013 tax year earned income and adjusted gross income must each be less than:
- $46,227 ($51,567 married filing jointly) with three or more qualifying children
- $43,038 ($48,378 married filing jointly) with two qualifying children
- $37,870 ($43,210 married filing jointly) with one qualifying child
- $14,340 ($19,680 married filing jointly) with no qualifying children
Consumers must also file a tax return with the Internal Revenue Service to receive the earned income tax credit even if no taxes are owed or you are not required to file.
According to the DC Fiscal Policy Institute, the District’s earned income tax credit program, known as the DC EITC, is a key tool to increase the take-home pay of low-income working residents. “By boosting incomes and reducing tax liabilities, the EITC has become one of the most effective anti-poverty programs for low-income working families,” states the DC Fiscal Policy Institute. The DC EITC program, modeled after the federal program, is the second largest state-level EITC in the nation, and can provide significant tax relief to residents with very low incomes. While approximately 50,000 District residents claim federal EITC dollars and more than 46,300 claim DC EITC funds, many residents still do not avail themselves to these available dollars. The DC Fiscal Policy Institute estimates that there are still roughly 7,000-11,000 EITC-eligible District residents who may not be claiming the federal or local credit, and an additional 3,600 who claim the federal credit, but not the local EITC.
Fortunately, there are local resources available to assist families with accessing earned income tax credit dollars. The DC EITC Campaign (www.dceitc.org) is a citywide initiative that brings together private and public sector organizations and volunteers to educate consumers about the earned income tax credit and other income tax benefits. During the 2012 filing season, 5,500 taxpayers filed at DC EITC tax sites, claiming more than $7 million in tax refunds.
The DC EITC campaign, managed by the Capital Area Asset Builders, also offers volunteer opportunities such as client coordinator, volunteer tax preparer, foreign language interpreter and tax return quality reviewer. For more information on volunteer opportunities, tax preparation sites and consumer outreach please go to www.dceitc.org or call 877-728-3515. Remember tax preparation sites open Feb. 1. It’s time to collect those dollars at your door.