The Importance of the Earned Income Tax Credit

Advocates and supporters joined at the United Way Friday morning in an effort to spread awareness about the Earned Income Tax Credit (EITC) available to low-income working individuals.

Mayor Emily Larson said if you’re eligible, and you claim this tax credit – it leads to more economic stability for families and also the community. She added that when one receives this tax credit, the money generally goes back into the economy. When someone is low income, the EITC can give back up to around $5,000 if they have three or more children.

“For many who claim this credit, the money ends up being used to purchase things they can’t normally afford, such as a vehicle, a down payment on a home, repairs, etc.,” said Angie Miller, executive director of Community Action Duluth.“So not only does this refund benefit the individual receiving it, it also benefits local businesses and our economy when the money is spent.”Miller mentioned that, unfortunately, only 1 out of 5 taxpayers who qualify for the EITC claim it because so many people don’t know about it.

Congressman Rick Nolan said the EITC is a federal tax credit, it’s not welfare, and this is money that was earned.“On average, those who qualify end up getting back about $2,210 each year,” he said in a video presentation.He suggested that people should, “call your local officials and advocate for this credit.”Nolan added that those who don’t have children get far less than those who do, only about $500 per year.

Community Action Duluth has 90 volunteers who offer their time to participate in the Free Tax Site program, beginning Jan. 28 at 8:30 a.m. to assist those who qualify with tax preparation. The last day to get in and find assistance is April 17.All volunteers must go through a training course and pass a test to qualify as a tax preparer. Those who don’t qualify include:Persons age 21-24 who don’t have children Persons who didn’t work that year Families and individuals who earned more than $56,000 annually Days and times available to get help:Mondays: Doors open at 4:30 p.m.Tuesdays: Doors open at 4:30 p.m.Saturdays: Doors open at 8:30 a.m.

A local woman, Corisa Thom, shared her story at the news conference. At the age of 26, her mother passed. She was then responsible for her 15, 18 and 20-year-old younger brothers as well as her 3-year-old nephew.“You can’t give up when you have other people depending on you,” said Thom. She went to Community Action and received help with tax preparation and found she was eligible for the EITC, which, year by year, slowly helped her get her family in a better, much more comfortable place.“First, we were able to get a vehicle. Then, I put away some emergency savings. After that, I bought a three-bedroom home. One year, it even helped me to add a bedroom so my nephew could have his own,” she explained.Those who go to the Volunteer Income Tax Assistance program to get help generally receive 94 percent more on their return than if they had prepared their taxes themselves.

Northland Leaders Celebrate EITC Awareness Day

Tax season has begun and it’s important to take advantage of every possible tax credit. Because may low-income working individuals are not, Northland leaders are speaking out Friday, January 27, to raise awareness of credits too often overlooked.  For example, because of tax credits like the EITC and WFC, a tax refund can account for more than 30% of a household income. However, one-in-five eligible taxpayers aren’t claiming their ETIC. The EITC is a vital tool that helps low-income working individuals and families boost their incomes and move out of poverty.Everyone is invited Friday to join speakers which include Duluth Mayor Emily Larson, State Representative Liz Olson, Head of the Lakes United Way President Matt Hunter, a Representative from Senator Al Franken’s Office, Community Action Duluth Executive Director Angie Miller and Earned Income Tax Credit Recipient Corisa Thom, as they shed light on subject.The event will at 11:00 a.m. at the Ordean Building, 424 West Superior Street, in Duluth.Read More: Northland Leaders to Celebrate Earned Income Tax Credit Awareness Day Friday |

Credit where credit is due! Earned Income Tax Credit

DULUTH — On average, people who claim the federal earned-income tax credit see an extra $2,210 added to their refund checks. Yet about 20 percent of eligible households leave that money on the table by failing to claim a benefit to which they’re entitled.

“We want people to be aware of a tax credit that can really help them — an anti-poverty initiative that’s very important to get money into the pockets of people who could really use it,” said Matt Hunter, president of the Head of the Lakes United Way, which launched an awareness campaign Friday in Duluth.

Duluth Mayor Emily Larson noted that the credit helps recipients and the local community as a whole.

“This is money that gets to stay here and gets recirculated back into our economy,” she said.State Rep. Liz Olson, who serves the residents of District 7B in central and western Duluth, said poverty is “a reality for many people who live within our community, particularly in my district.”Olson noted that Minnesota offers its own credit which amplifies the federal benefit. It’s called the Working Family Credit, and she said that last year, Minnesota distributed its credit to about 350,000 households, with about half the money going to families in greater Minnesota. The average refund offered through the Working Family Credit program was about $741 per household.”There’s been proof that the receipt of this tax credit… really leads to long-term economic stability for families. Kids are more likely to graduate from high school, and they’re more likely to go on to college. We know that that benefits our community in a lot of ways,” Olson said.

U.S. Rep. Rick Nolan was unable to attend Friday’s event but sent a video message, encouraging people to file for the earned-income tax credit.”To be clear: This is not welfare or unemployment benefits.

This is money people have earned and should rightfully be claiming on their tax returns,” he said.Angie Miller, the director of Community Action Duluth, said that because of the federal and state credits, “tax time is a money moment for low- and moderate-income individuals and families.”That refund is often the biggest check a household will receive all year, Miller noted.”It can be up to 30 percent of their income, so it’s a powerful incentive to be employed,” she said.”Taxpayers use their refunds to pay down debt, catch up on bills, save for a rainy day and to make important purchases,” said Miller, whose own family benefited from the credits for several years, back when her children were young.If people need help filing a claim, Miller said Community Action offers free tax preparation for families and individuals with household incomes of up to $56,000Last year, Community Action volunteers helped 1,525 households prepare their taxes, and those returns yielded state and federal refunds that totaled about $2.9 million, Miller said.

One of the beneficiaries was Corisa Thom, who said she’s relied on the free service to prepare her taxes for 10 years running.She first turned to Community Action for help at the age of 26, when her mother died, leaving her to care for three brothers, ages 13, 15 and 17. A young nephew has since joined the household, too.Thom is employed as a direct support specialist for a couple of Duluth group homes and said the state and federal tax credits have helped her tackle a number of projects, such as adding a fourth bedroom to the family house, constructing a shed and paving a driveway.”I don’t think I would have been able to get as far, or even keep my house, if it wasn’t for the earned-income tax credit,” Thom said.This year, the IRS has advised taxpayers that it will take more time to issue refunds that include earned-income tax credits, as it steps up efforts to fight fraud. The federal agency estimates that 21 to 26 percent of these claims previously have been paid in error and now advises people to expect to wait until at least Feb. 27 to receive credit payments.Miller predicts the delay will cause disappointment and hardship in some cases.”People are going to be surprised, because actually they needed the money yesterday,” she said.As much as that may be the case, Miller advises against taking advance payments from commercial tax preparers or borrowing against an anticipated refund at unfavorable rates.PULLOUT BOXFor more information• For guidelines on the earned-income tax credit, including who qualifies, go to• The United Way offers a free tax assistance service for income-qualified people online at• The IRS Volunteer Income Tax Assistance and the Tax Counseling for the Elderly programs offer free tax help for taxpayers who qualify. Locally, contact United Community Action Willmar, 200 Fourth Street S.W., 320-235-0850, beginning Tuesday and continuing through April 15.