Earned Income Tax

The earned income tax credit each year puts billions of dollars into the hands of millions of lower- to middle-income workers. Under normal circumstances, one quarter of taxpayers eligible for the credit fail to claim it, partly because the rules are complex and some workers may not be aware they qualify, according to the Internal Revenue Service. But the number of workers missing out on this credit could be even higher this year. Eligibility is tied to income. And if you lost your job or your employer cut your hours last year, you might not realize that your income has fallen to the point where you qualify for the credit for the first time.

It didn't take Democrats much time to denounce Rep. Paul Ryan's latest plan for addressing poverty in this country. The main feature of the Republican's proposed "Opportunity Grant" would be to roll a lot of social welfare programs together and leave it mostly to states to decide how the money is spent, which sounds a great deal like the block grant proposals of the past. Critics included Maryland's own Rep. Chris Van Hollen, ranking member on the House Budget Committee, who said the former vice presidential nominee has used the mantra of "reform" as a cover to cut safety-net programs.

FOR LOW-INCOME workers, every dollar counts, which is one reason it's critical not to overlook the earned income tax credit this year when preparing tax returns. Created in 1975, the federal credit has become one of the largest anti-poverty programs by reducing tax bills and, in some cases, giving refunds worth thousands of dollars. More than 21 million filers collected $37.7 billion under the credit last year, according to Internal Revenue Service figures. Nevertheless, millions of workers eligible for the credit routinely don't claim it. As many as 7 million households nationwide left more than $12 billion unclaimed, the Association of Community Organizations for Reform Now, or ACORN, estimated in a report last fall.

Maryland joins at least a dozen other states Tuesday in banning the sale of 190-proof grain alcohol, a measure that lawmakers hope will help to reduce sexual assaults and binge drinking among college students. The bill is one of more than 200 that go into effect Tuesday; other bills expand the earned income tax credit for low-income residents and exempt more wealthy Marylanders from the estate tax, overhaul Baltimore City liquor board practices and establish incentives to encourage investment in research universities.

Hoping to take advantage of Maryland's record surplus, two key lawmakers are proposing to increase the amount of money returned to the working poor under the state's earned income tax credit program. Del. Sheila E. Hixson, who chairs the House Ways and Means Committee, said yesterday she will introduce legislation to refund more money to low-income families under a formula based on their federal tax return. "In a time when obviously there's so much money, the people who need it the most should benefit," said Hixson, a Montgomery County Democrat.

WELFARE REFORM has swollen the job force with low-wage employees who, even if employed full time, are often referred to as the "working poor." The ready supply of such people has depressed wages for waiters, janitors, maids, retail clerks and others. They are learning that in this service-oriented economy, a job no longer guarantees a decent life.Yet the movement of people into the work force is a good thing. Morally, it is right to take responsibility for oneself. Besides, public assistance does not provide enough for families to escape poverty and dependency.

The federal earned-income tax credit pumped $125 million back into the pockets of Baltimore's low-wage workers in 2000, but millions of those dollars are being spent on commercial preparers who charge high fees for loans on tax refunds, a new report says. Advocates for the poor point to the Brookings Institution report, released yesterday, as evidence that many low-income workers don't know they can have their taxes done free. As tax season begins, they are stepping up efforts to expand free preparation sites, while encouraging filers to establish bank accounts into which refunds can be directly deposited - and received much faster than through the mail.

WASHINGTON -- It's a welfare alternative favored by presidents from both parties. Conceived by President Nixon, implemented by President Ford and expanded by Presidents Reagan, Bush and Clinton, the earned income tax credit sends government checks to the working poor that usually exceed the taxes they pay.Mr. Reagan called it "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress."Now, however, the program's bipartisan support is crumbling. Republicans, citing what they say is fraud and out-of-control growth, want to scale back the tax credit by tightening eligibility.

NEW YORK -- Marriott International Inc., CVS Corp. and 40 other companies that hire low-wage workers are urging their employees to collect a tax break in their paychecks rather than paying fees for tax-preparation services and loans to get it as a lump sum once a year. The group, representing businesses employing 4 million people, is distributing flyers, stickers, posters and other educational tools to company managers to encourage employees to sign up for the little-used version of the earned income tax credit.

For these men at the bottom of the income spectrum, we have focused largely on punitive measures rather than removing barriers to employment. ... We need to boost earnings for these workers to attack the poverty and economic insecurity that confronts them."

Class, here's a pop quiz on Washington's view of economics. Who gave the following unsolicited endorsements of the Earned Income Tax Credit, the refundable federal tax credit for low and moderate income workers? The program gives "families flexibility - it helps them take ownership of their lives. " "A fairly efficient poverty abatement program. " "Promotes work as it reduces poverty. " If you said President Barack Obama, who on Tuesday proposed an expansion of the tax credit as part of his fiscal 2015 budget proposal - or even the usual suspects in the liberal, socialist, income-redistributing, Wall Street-bashing end of the political spectrum - that would be understandable, but it would also be quite wrong.

The latest statistics last week from the Census Bureau are grim. Household income has fallen sharply; poverty is up. And that's based on data from a year ago, when employment was in better shape. Even more so now, every penny counts. So is there any way to get extra money in your paycheck without asking the boss for a raise? One way is to get an advance on the Earned Income Tax Credit, a credit worth thousands of dollars to lower-income workers. Usually, people claim the credit on their tax returns.

The earned income tax credit each year puts billions of dollars into the hands of millions of lower- to middle-income workers. Under normal circumstances, one quarter of taxpayers eligible for the credit fail to claim it, partly because the rules are complex and some workers may not be aware they qualify, according to the Internal Revenue Service. But the number of workers missing out on this credit could be even higher this year. Eligibility is tied to income. And if you lost your job or your employer cut your hours last year, you might not realize that your income has fallen to the point where you qualify for the credit for the first time.

Name : Rob Bader Salary: $55,000 Age: 38 Years on the job: Four How he got started: Bader received his bachelor's degree from Siena College in New York and attended law school at the University of Toledo, graduating in 1995. He volunteered for a year while living in Boston, working in a soup kitchen and a legal aid office. He moved to Pennsylvania and worked as a legal aid attorney for the next six years. Although he was doing good work, Bader said it became somewhat monotonous, so he and his wife joined the Peace Corps, heading to Africa for two years.

Oretha Jones hasn't filed a federal tax return in at least two decades, but she will this year. The 81-year-old West Baltimore resident learned yesterday that she has to fill out a tax return - not usually necessary for those who rely mostly on Social Security benefits - to get her tax rebate, part of an economic stimulus package approved by Congress this year. "I've been waiting to find out what I had to do," Jones said. "I was wondering if seniors get it, and I was trying to find out how."

For these men at the bottom of the income spectrum, we have focused largely on punitive measures rather than removing barriers to employment. ... We need to boost earnings for these workers to attack the poverty and economic insecurity that confronts them."

Gerald Ford put it into law. Ronald Reagan extolled it as "the best anti-poverty, the best pro-family, the best job-creation measure to come out of Congress." George Bush expanded the program still more. Called the Earned Income Tax Credit, it fulfills Republican objectives in rewarding work, drawing people off welfare and raising up the working poor above the poverty level without increasing minimum wages.So why are some of the gung-ho conservatives on Capitol Hill intent on slashing away at a popular, bipartisan federal initiative that helps 14 million low-income Americans make ends meet?

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, state officials said.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, said Marvin A. Bond, a spokesman for the Maryland State Comptroller's Office.Many others are not claiming a poverty-level income deduction available on their Maryland tax returns.

Hey, Baltimoreans, can you use $29 million? That's roughly how much city residents will forfeit this year by not claiming the earned income tax credit. The federal tax credit has been putting hundreds and even thousands of dollars into the hands of the working poor since 1975. And this is money you can get refunded to you, even if your wages are so low you don't have to file a tax return. Last year, 22 million workers claimed the credit and received nearly $44 billion. About 330,000 of those are Marylanders who pocketed $615 million.

Tax season is just around the corner. Are you wondering whether or not to worry about the alternative minimum tax? Are you scratching your head about how to claim your gambling losses? Are you tearing your hair out about what in tarnation the earned income tax credit is and how you might qualify? Take a deep breath. There's help available and the best part is, you don't even have to pay for it. The Internal Revenue Service offers help by computer, telephone and in person - whether you need the right forms, publications or just answers on a wide range of questions.