February 5, 2009 Issue
Goss Urges Taxpayers To Check for Eligibility for Earned Income Tax Credit
State Senator Steve Goss urges residents of the 45th Senate District—Alexander, Ashe, Watauga and Wilkes counties—to consider if they, their friends or their relatives might be eligible for the federal and state earned income tax credits when they file their taxes this year. These credits are especially helpful for working families with dependent children.
Goss noted, “Because of the economic stress our communities are feeling, it is critical that working families in our district get full credit in filing their taxes for the work they have done. I urge everyone to encourage their neighbors to explore whether they qualify for the tax credit as they file their taxes.” He stressed that workers who are not otherwise required to file an income tax return because of their low-income levels should file a return to claim the credit for which they may be eligible.
The earned income tax credit (EITC) is a federal tax credit. Designed to “make work pay,” the EITC provides working families earning less than $41,646 in 2008 a credit on their earned income. The credit can put more than $4,800 in the pockets of those who qualify; the average credit is $1,735. As an additional incentive, this year workers can also claim the new North Carolina EITC that the General Assembly passed in 2007 and that is worth 3.5 percent of the federal credit. For some families with two or more children, the two credits combined can be worth close to $5,000.
First enacted in 1975 under President Gerald Ford, the EITC expanded under presidents Ronald Reagan, George Bush, Sr. and Bill Clinton and has had longstanding bipartisan support. In 2005, 770,644 working families—21 percent of all NC taxpayers—filed for the credit and received a total of more than $1.5 billion, an average of $1,950 per family. Estimates indicate that some 19 percent of families in the 45th Senate District qualify for the credit.
Nationally, the IRS estimates that only 75 percent to 85 percent of those eligible for the credit file for it. Using these 75 and 85 percent figures as a guideline, state officials estimate that in North Carolina between 135,000 and 256,000 eligible tax filers fail to claim the credit each year, leaving between $132 million and $250 million dollars unclaimed each year. Even if workers were laid off or lost their jobs in 2008 as the state’s unemployment rate rose to 8.7 percent, they are still eligible to receive the credit as long as they had earned income during the year.
Governor Bev Purdue noted in a recent press release, “North Carolina legislators chose to enact a state EITC because it has proven to be one of the country’s most effective programs to support low- and moderate-income working families. Because the eligibility rules for both the federal and state EITC are the same, it is also easy for the state to administer. While participation in the federal EITC in North Carolina is high—more than 80 percent of those eligible receive the credit—this year more than ever we want to make sure that all eligible workers know to file for both the federal and state credit.”
Goss stressed that working taxpayers need to get the best advice and assistance in determining their eligibility for the tax credits. Here are some sources of free assistance:
• To find a free income tax preparation site near you, call the North Carolina toll-free Tax Helpline at 1-800-927-3230 and talk with a friendly person at Connectinc.
• In West Jefferson, assistance is available at the Ashe County Public Library, 336-877-0100,
and at Ashe Services for Aging Inc., 336-246-4347.
• In Boone, call the L.E Harrill Senior Center at 828-265-8090.
• If you prepare your own taxes and earn less than $52,000, you can file free online on the NC Beehive at nc.thebeehive.org or through the NC Department of Revenue at www.dornc.com.
• For an online estimate of your eligibility for the earned income tax credit, click to www.eitc-carolinas.org/index.aspx.
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