Low-income taxpayers are not taking advantage of deductions and credits on both their state and federal returns that would reduce their taxes and increase refunds.
According to Marvin A. Bond, a spokesman for the state Comptroller's Office, one in five low-income taxpayers in Maryland is not applying for an earned-income tax credit available to anyone who earns less than $21,250 per year and maintained a home for at least one child for at least six months in 1991.
Many others are not claiming a poverty-level income deduction available on their Maryland tax returns, Mr. Bond said.
Changes in the tax law last year have made the federal earned-income tax credit even more lucrative than in years past.
And anyone who claims the earned-income tax credit on a federal return can also claim 50 percent of that tax credit on a Maryland return.
Mr. Bond estimates that more than 160,000 people in Maryland are eligible for the state tax credit, 52,000 of them in Baltimore and 17,000 in Baltimore County.
One reason many low-income people do not claim the tax credit is that they do not earn enough income to file a tax return. But Mr. Bond pointed out that the federal earned-income tax credit can be paid even to those who had no income tax withheld or do not owe any income tax. So even people who do not need to file federal returns because of low income may want to file to qualify for the tax credit.
But that does not apply on the state level. The tax credit can be used only against any taxes that are owed, Mr. Bond said.
Another program often over looked by low-income taxpayers is the poverty-level deduction available on Maryland returns for those whose income is less than the poverty-level income for the number of exemptions they claimed on their federal tax return. Taking advantage of this deduction would eliminate virtually all state income tax for those who qualify.
Approximately 52,000 people in Maryland would qualify for this deduction, Mr. Bond said. A work sheet in the tax packet can guide anyone through the process of applying for the deduction.
"If they know they fall within the poverty guidelines, they should check it out," Mr. Bond said.
Free assistance with filling out state tax returns is available at all state income tax offices Monday through Friday from 8 a.m. until 5 p.m. Those seeking assistance should bring a completed copy of their federal tax returns and W-2 forms.
Help also is available by calling 1-800-MD TAXES.