It’s Tax Time! Do You Qualify for a Tax Credit?
Mark your calendar – one month from today (April 18th) is Tax Day! For low-income working families, this could be the time of year where they see a boost in their family’s annual income.
The Earned Income Tax Credit (EITC) is identified as one of the greatest anti-poverty programs in our country. Families with children or childless adults, between the ages of 25 to 65, may qualify for the tax credit. An eligible taxpayer must have earned income from employment.
EITC was originally created under President Ford and expanded by President Reagan. At the end of 2015, Congress voted to make permanent the EITC and the Child Tax Credit, originally set to expire in 2017.
In Iowa, an eligible taxpayer claiming the EITC can receive 15% of the federal credit and the credit is refundable. In 2015, 212,000 Iowans qualified for the credit, and received an average credit of $2,182.
Advocates are pushing to extend the EITC for childless adults. The Center for Budget and Policy Priorities released a report in support of an extension.The report highlights the challenge for childless adults being pushed further into poverty because of payroll and other federal taxes, which the EITC in its current state cannot remedy. Additional information in the report compares proposed changes to the EITC with current law.
Iowa is one of only a few states that appropriates money to provide EITC outreach. Volunteer Income Tax Assistance (VITA) sites provide free tax preparation and filing to low- to moderate-income tax payers (with a combined earned income under $58,000). CLICK HERE to identify a VITA site near you.
Identifying solutions to lift children, young adults, and families out of poverty are views we would like to hear from our future President. Make sure to check out the Digital Dialogue to learn more about how the candidates talk about anti-poverty programs, such as the Earned Income Tax Credit.