Helping low-income families get a tax break

January 21, 1992|By Mary Maushard

THE MARYLAND Committee for Children and the United Way of Central Maryland are helping low-income families get the tax credits they have coming.

How much do they have coming?

In 1989, Maryland taxpayers received more than $100 million from the Earned Income Tax Credit, which gives money back to low-income families. And that was before the tax credit was liberalized.

Because of changes in the laws governing this federal credit, families that earned less than $22,000 last year may be eligible for credits up to $2,020 this year. The maximum credit last year was $953, said Domenic J. LaPonzina, public affairs officer for the Internal Revenue Service in Baltimore.

This increase in the credit came from the new federal child care law, which put more money into the Earned Income Tax Credit so that it could be spread among low-income families, said Ann Feldman of the Maryland Committee for Children.

Even families that do not earn enough money to pay taxes can get this credit through a refund. But, first, they have to know about the tax credit, said Ms. Feldman. And then they have to know how to file for it.

That's where the committee, the United Way and other non-profit organizations come in. Their volunteers will be speaking to employee and community groups and offering tax assistance to those eligible for the credit. Senior accounting majors from four local colleges will assist taxpayers by phone and in person at two centers.

Almost 187,000 Maryland taxpayers filed an Earned Income Tax Credit for 1989 and received $100,430,000 in credits, according to an IRS Statistics of Income Bulletin. This represented about 12 percent of the state's returns.

There are probably many more state residents who could claim this credit. "We know that nationally 20 percent of the people who qualify don't apply," said Ms. Feldman, adding that many taxpayers not eligible previously might be able to take the credit this year because they were unemployed part of last year.

"A lot of people think their incomes are so low and they won't file," she said. "But they need this money; the government owes them the money."

The credit ranges from about $4 to $2,000, depending on income, family size and whether a family paid for its children's health insurance. Families with children born in 1991 are eligible for an additional credit, ranging from $1 to $357. The amount is again based on a family's size and income, said Mr. LaPonzina.

Those families with adjusted gross incomes around $11,000 will be eligible for the most money. If a family does not have a newborn and did not pay for health insurance, it would be eligible for a maximum credit of about $1,200, according to IRS schedules.

To be eligible, a family must:

* Have earned income -- and adjusted gross income -- of less than $21,250. Because it must be earned income, the taxpayers must have worked during 1991.

* Have a child, grandchild or stepchild under age 19 who lived with the family for more than six months. Children who are full-time students may be as old as 24 and there is no age limit on permanently disabled children living with their families.

* Or, have a foster child who lived with the family all year.

Both married and single taxpayers are eligible, but married taxpayers must file jointly to be eligible, Mr. LaPonzina said.

The IRS will also lend a hand to eligible taxpayers. For those who complete the first page of Schedule EIC, Earned Income Credit, the IRS will do the rest, he said. Of course, taxpayers won't know how much credit they are entitled to when they send off their tax returns.

For those who want to do the work themselves, tax assistance programs are being being set up at Towson State University and at Northwood Appold United Methodist Church, at Loch Raven Boulevard and Cold Spring Lane.

To learn more about these programs and the Earned Income Tax Credit, phone the United Way's 24-hour referral service, First Call for Help, at 685-0525 or (800) 492-0618. The service's staff will find help for eligible families.

The IRS is also offering the following assistance:

* Its free publication, Earned Income Credit, No. 596, explains the credit and how to file for it. To get a copy, phone (800) 829-3673 or go to the local office of the IRS on the first floor of the Fallon Federal Building, 31 Hopkins Plaza. It is open from 8 a.m. to 4:15 p.m. Monday through Friday.

* For answers to questions about this credit and other tax problems, call the IRS at 962-2590 or (outside the Baltimore metropolitan area) at (800) 829-1040.

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