Health and Family Services Cabinet
Earned Income Tax Credit Gives Families an Income Boost; Thousands of low-income Kentuckians are eligible but don’t apply
FRANKFORT, Ky. (March 9, 2007) – Families and individuals who meet certain guidelines could get more from their 2006 tax returns or regular paychecks by taking advantage of the Earned Income Tax Credit (EITC).
With the April 17 tax filing deadline weeks away, the Kentucky Cabinet for Health and Family Services is reminding Kentuckians -- including those receiving welfare assistance -- that they may qualify for the federal EITC, a refundable income tax credit designed to benefit low-income families in which one or more person works.
“For earners in lower-wage jobs, the EITC can be a valuable income source,” said Kelly Jackson, director of the cabinet’s Division of Family Support. Families who receive Kentucky Transitional Assistance Program (K-TAP) benefits may also be eligible.
Kentuckians who qualify for the EITC and file a federal tax return will owe less in taxes and could get cash back. The EITC is for single or married parents who work full or part-time. Some adults without children also qualify.
While one-fifth to one quarter of Kentuckians who file income taxes claim the EITC, it is estimated that 15 to 25 percent of eligible families, including many immigrant workers, do not claim EITC when they file their return.
Jackson said it’s hard to know how many people qualify for the EITC.
“If you meet the income guidelines, that is a start,” she said. “It’s worth the time it takes to look into it.”
The credit is determined by scale and is typically received as part of the individual’s federal income tax refund. Some workers may choose the Advance EITC, which adds the credit to their paychecks year-round.
Taxpayers might be eligible for the EITC if their earned income and adjusted gross income (AGI) each is less than:
• $36,348 ($38,348 married filing jointly) with two or more qualifying children;
• $32,001 ($34,001 married filing jointly) with one qualifying child;
• $12,120 ($14,120 married filing jointly) with no qualifying children. (Must be at least age 25 but under age 65.
Those applying for services at a family support office are given detailed information about the EITC and a 2006 earned income credit tax form, Jackson said. Handouts are available in several languages, including Spanish, Bosnian and Vietnamese. Clients whose benefits are discontinued because of earnings are also informed of the credit.
“The EITC helps lift families out of poverty,” Jackson said. “We want to keep families who meet the criteria informed so they won’t leave that money unclaimed.”
An Internet-based program, the EITC Assistant, can help taxpayers determine eligibility. The program is available in English and Spanish. Log on to http://www.irs.gov/individuals/ and scroll down to the EITC link to find more information about the credit.
The EITC has no effect on certain welfare benefits. In most cases, EITC received will not be used to determine eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing or most K-TAP payments.
“This credit can supplement other forms of assistance and is extremely valuable for parents who are stretching their paychecks,” Jackson said.
Special rules make it easier for those with disability retirement income, military personnel serving in combat zones, members of the clergy and hurricane victims to claim the EITC.
EITC-eligible families may qualify for free tax preparation and electronic filing through the Free File Alliance. Learn more about Free File online from the Kentucky Department of Revenue at http://revenue.ky.gov/freefile.htm.
Also, free tax preparation and filing assistance are available in many communities across the state to low-income and older Kentuckians. Trained volunteers can help identify eligibility for EITC as well as other tax credits. Taxpayers can locate the site closest to them by calling the IRS helpline, (800) 829-1040.
The filing deadline for 2006 Income Tax returns is April 17, 2007, because April 15 falls on a Sunday, and the following day, Monday, April 16, is Emancipation Day, a legal holiday in the District of Columbia.
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