Importance of Earned Income Tax Credit
Thousands of Michigan workers could be eligible for the Earned Income Tax Credit and not know it. As a result, they may overlook claiming federal and state tax credits, which can put as much as $5,891 and $353 into their pockets, respectively.
“The earned income tax credit is a financial boost for Michigan workers and their families. Unfortunately, as the IRS estimates, one in five eligible taxpayers fails to claim it every year,” said Ross H. Yednock, Program Director of the Michigan Economic Impact Coalition, a program of the Community Economic Development Association of Michigan.
“By raising awareness of the Earned Income Tax Credit and availability of our state’s free volunteer income tax assistance programs, we can help more Michigan families claim this valuable tax credit,” Yednock said in a statement.
Officials are encouraging anyone who earned $51,000 or less from wages, self-employment or farming in 2012 to see if they qualify for the Earned Income Tax Credit.
“Thousands of Michigan workers could overlook valuable tax credits like the Earned Income Tax Credit, leaving tens of millions of dollars in tax relief in Washington, D.C., and Lansing instead of their pockets,” said State Rep. Winnie Brinks, D-Grand Rapids. “It is important that every taxpayer knows that this is their money and there is help available to claim it.”
To promote Earned Income Tax Credit awareness and encourage financial security, the Community Economic Development Association of Michigan sponsors Show Me the Money Day events on the last Saturday of January in communities across Michigan.
This year, nine communities will host Show Me the Money Day events offering free financial education workshops, tips on savings and credit building and information on low-cost financial products and services offered through local financial institutions and community-based organizations.
“Making sure Michigan taxpayers can keep more of their hard-earned money helps them become more financially secure and helps us create jobs,” said State Rep. Jim Ananich, D-Flint. “We have to use every tool available, like the Earned Income Tax Credit and free tax-prep assistance, to support working families and the local small businesses that depend on them.”
The Michigan Economic Impact Coalition is a statewide coalition of organizations, individuals and elected officials committed to helping financially empower Michigan families through outreach on available tax credits and refunds, financial education, asset building and free tax preparation services.
Michigan Economic Impact Coalition members, like the capital area’s Asset Independence Coalition, connect Michigan workers with free services and volunteer income tax assistance sites at which low- and moderate-income households can have their taxes done for free by IRS trained and certified volunteers.
This saves working families money on tax preparation fees and connects them to other quality, low-cost financial services and tools to help increase their financial security.
In 2012, roughly 820,000 households in Michigan claimed the Earned Income Tax Credit, resulting in more than $1.86 billion in federal tax relief.
Because the status of eligible workers is very fluid – workers move into and out of eligibility based on changes in their marital, parental and financial status – the IRS estimates that one-third of the Earned Income Tax Credit eligible population turns over every year resulting in one in every five eligible workers failing to claim the Earned Income Tax Credit.
Eligible workers only receive the Earned Income Tax Credit if they file an income tax return – even if they are not otherwise required to file – and specifically claim the credit.
Taxpayers across Michigan have several options for free help determining their Earned Income Tax Credit eligibility and claiming the credit.
They can go to a volunteer income tax assistance site and have an IRS trained and certified volunteer prepare and file their federal, state and local income taxes, or prepare their own taxes using a free internet-based tool with assistance from an income tax assistance volunteer over the phone.
Since there are no volunteer income tax assistance sites in the Upper Peninsula, area residents would receive assistance over the phone.
To help accurately determine Earned Income Tax Credit eligibility and prepare returns by using a free volunteer assisted self-preparation tool, individuals should bring:
– Photo proof of identification
– Social Security cards for themselves, their spouse and dependents or Social Security number verification letters issued by the Social Security Administration
– Birth dates for all persons listed on the tax return
– Wage and earning statement(s) Forms W-2, W-2G, and 1099-R, from all employers
– Interest and dividend statements from banks (Forms 1099)
– Copies of last year’s federal and state returns, if available
– Bank routing and account numbers for direct deposit of their refunds
– Other relevant information about income and expenses
– Amounts paid for day care, if applicable and the day care provider’s identifying number.
To electronically file their returns and get the fastest refunds, both spouses must be present to sign joint returns.
The Michigan Earned Income Coalition, a program of the Community Economic Development Association of Michigan, unites individuals, organizations and local initiatives committed to supporting tax credit and asset building opportunities for Michigan families through improved access to free, quality, income tax preparation assistance.
The Community Economic Development Association of Michigan is a nonprofit membership organization that represents hundreds of individuals and organizations committed to revitalizing and rebuilding Michigan through community economic development.
For more information, visit http://www.cedam.info or http://meic.cedam.info.