Credit where credit is due: Campaign encourages more people to claim 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 $56,000
Last 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.
For more information
• For guidelines on the earned-income tax credit, including who qualifies, go to irs.gov/credits-deductions/individuals/earned-income-tax-credit
• The United Way offers a free tax assistance service for income-qualified people online at MyFreeTaxes.com
• 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.