Every year, thousands of East Valley residents fail to claim the federal earned income tax credit, therefore robbing themselves of what could be thousands of dollars in extra income.
Last year, nearly 50,000 federal income tax returns from Chandler, Gilbert and Mesa claimed the earned income tax credit, according to the Internal Revenue Service. In all, more than $97.1 million was claimed through the credit.
“Our estimate is that somewhere between 75 percent and 80 percent of those eligible actually claim the credit,” said David Williams, director of IRS electronic tax administration and refundable credits. “Unfortunately, the inverse of that is that somewhere between 20 percent and 25 percent of taxpayers who are eligible do not.”
The earned income tax credit is “one of the largest and frankly most effective anti-poverty programs in the government,” he said. Last year, it delivered nearly $50 billion to nearly 24 million taxpayers, he said.
“For a couple with three or more children in the maximum range, with income somewhere around $10,000 to $20,000, the credit can be as much as almost $5,700,” Williams said. “That’s certainly the largest single paycheck or amount of money that that couple will see in a year. It can have profound implications, not only for the individual or family … but for the broader community in which the money from the credit is spent.”
Typically, people who fail to claim the credit include workers without qualifying children, people whose earned income falls below the threshold required to file a tax return, farmers, rural residents, people with disabilities, and nontraditional families such as grandparents raising grandchildren, he said.
“This year we think there’s a new category of folks who may be eligible and not claiming, and that’s folks who in the past may have made far too much money to qualify, but this year because of economic circumstances — potentially a job loss, a reduction in pay or a move to part-time work — may very well be eligible for the credit and may not know it,” Williams said.
Taxpayers can receive guidance on preparing their tax returns and claiming credits at www.irs.gov or at local IRS offices. In the East Valley, the Mesa IRS office is located at 1818 E. Southern Ave., Suite 14, west of Gilbert Road. It is open from 8:30 a.m. to 4:30 p.m. Monday through Friday, and will be open from 9 a.m. to 2 p.m. two Saturdays this month, Feb. 6 and Feb. 20. The office can be contacted at (480) 503-7355.
“This year the credit has been expanded as part of an overall package of tax breaks that were enacted as part of federal economic stimulus legislation,” Williams said.
The legislation created a new category for families with three or more children and expanded the maximum benefit for this category, he said.