More low-wage workers could save on taxes

Residents in Northeastern Minnesota passed up a $6.7 million federal stimulus package last year.

That’s the estimated amount that eligible taxpayers didn’t claim in Earned Income Tax Credit, a 35-year-old program to help low-wage families receive larger tax returns.

Former President Reagan called EITC “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress,” but the Internal Revenue Service estimates that 20 percent to 25 percent of qualified people don’t claim it.

In 2009, more than 16,000 taxpayers in St. Louis, Carlton, Cook and Lake counties collected an average credit of $1,700 in EITC money — a total that exceeds $26 million. The typical recipient of the credit is a single working parent with children, though others might qualify.

Angie Miller, executive director of Community Action Duluth, said the impact of EITC is felt immediately.

“I know the value to Duluth: It’s millions and millions, and it comes into our economy and is very quickly spent because it’s money these people needed yesterday,” said Miller. Her organization helped about 500 low-income earners in the area receive more than $840,000 from EITC last year. “It’s groceries, car repairs and appliances.”

It’s much more than that for Duluth’s Elizabeth LaPre, a Super One worker and mom taking advantage of Community Action Duluth’s free tax service on Saturday. With the credit, the amount of her refund totaled more than $3,500.

“I didn’t know about it,” she said of EITC after a preparer finished her return. “This is my first time filing for it.”

With the economic recession changing many people’s income levels, the IRS is promoting the benefits of EITC for those who have been laid off, furloughed or had their hours reduced in the last year.

“One of the reasons that we are emphasizing EITC very strongly this year is for people that may have had a job-loss or income-loss situation and may qualify for the first time this year, when they might not have qualified before,” said Carrie Resch, IRS spokeswoman.

With new legislation expanding the program, families with three or more children are now eligible for a larger refund. For instance, if a

married couple with at least three children earns less than $49,000 and files jointly, they could be eligible for a credit of up to $5,600.

“There are new groups that qualify every year, so we continue to talk about it,” Resch said.

Resch said families are typically aware of their eligibility, while nontraditional families such as grandparents raising grandchildren or young recent college graduates are less likely to be aware of the credit.

“People at a lower income level are expecting it, but others might not be aware of it,” said Eric Blomstrom, special projects manager at Community Action Duluth. “When people start to see those multi-thousand-dollar refunds, it’s hard to keep them away. Some people might not know that they should file, but it’s to their benefit to actually do it. The more people we have actually do it, and the more we can get the word out, the better. They can get those big checks.”

Eligibility for Earned Income Tax Credit

Earned Income and adjusted gross income must each be less than: