Credit means tax relief

Amid rising unemployment and a deepening recession many taxpayers are likely to be faced with a changed filing status as they prepare this year's tax returns.

But for those who qualify, the Earned Income Tax Credit could come as much needed relief in these tough economic times.

"In this economy there could be people who lost a job or had their income reduced who are now eligible for the EITC," said Douglas Shulman, IRS commissioner. "We really want people to claim all they can."

The EITC is a refundable federal income tax credit for low-to moderate-income working individuals and families.

To qualify, taxpayers must meet certain requirements and file a tax return, even if they did not earn enough money to be obligated to file a tax return.

In years past, between 75 and 80 percent of eligible taxpayers claimed the EITC, according to Shulman. This year, the IRS is making a nationwide effort to increase public awareness about the program.

To that end, the agency will open 12,000 volunteer tax sites across the country, though none in the Rio Grande Valley.

However, the United Way of Southern Cameron County and its Financial Stability Partnership community partners are offering several free tax assistance sites across the county for families with a household income of $40,000 or less.

When the program began several years ago it helped bring $200,000 in EITC refunds. Last year that figure reached $1.3 million and this year organizers hope to top $1.5 million, said Traci Wickett, president and CEO of United Way of Southern Cameron County.

"The EITC is the single most successful anti-poverty program in the U.S.," Wickett said. "It can be the difference between living above or below the poverty line."

While the local initiative is geared toward the EITC, it is also intended to raise awareness about Refund Anticipation Loans. The RALs are normally obtained a week or two before tax refunds, but fees and interest can be costly, especially for EITC recipients, Wickett said.

"RALs strip an enormous amount of wealth from people in our community who can least afford it," Wickett said.

Ultimately, its not the complexity of the EITC that is its biggest hurdle but awareness about the program, particularly what is required for eligibility, IRS officials say.

With the average EITC around $2,000 and the possibility of filing claims for the previous three years the EITC amounts to the working man's stimulus package.

Last year 24 million taxpayers received the EITC totaling $48 billion, and this year the agency is expecting more.

"I think everybody recognizes this is a difficult economy," Shulman said. "That's why the IRS is going out of its way to help taxpayers in need claim every single penny they can."