Tax Credit

The House of Delegates voted to give the working poor a share of the state's good fortune yesterday as it approved legislation making them eligible for a tax credit even if they don't pay taxes.The proposal, which has been approved by the Senate in a less generous form, passed the House 106-30 over the objections of a majority of the Republican delegates. The two houses must work out their differences before the bill can go to the governor.Both versions would make the state's earned income tax credit -- modeled on a similar federal benefit -- refundable if a family's credit amounts to more than taxes owed.

Thinking about buying a first home this year but haven't quite made up your mind?President Bush has a proposal designed to lure people like you off the sidelines and into a mortgage.It's a $5,000 tax credit for first-time home buyers. If Congress approves, it would work something like this:People who haven't owned a home for at least three years would qualify for the credit if they buy a house between Feb. 1 and Dec. 31, 1992.Contracts for homes signed by Dec. 31 would count, too, as long as the sale is closed by June 30, 1993.

Despite all her efforts to buy a home earlier, Nicole L. Payne found herself looking at properties Friday with a heck of a deadline looming. If she could get a home under contract by the end of the day, the federal government would send her $8,000. Later — nothing. The Brooklyn Park resident joined last-minute homebuyers rushing to get in before the door closed for the first-time homebuyer tax credit, an incentive aimed at reviving a floundering housing market and helping the struggling U.S. economy.

Butchers Hill property owner Alex Stroh had the right question about The Sun's comparison of two public databases that found hundreds of vacant Baltimore properties getting a tax break for owner-occupied homes: "Why couldn't the city just do that?" According to a report by Scott Calvert and Jamie Smith Hopkins , at least $325,000 in credits was at stake - not a fortune in terms of the city's overall finances, perhaps, but enough to at least partially restore some of the services that have been eliminated in recent budget cutting.

Jeff Burdick and his next-door neighbors have nearly identical two-story rowhouses, on the same block of East Clement Street with the same public schools and the same city trash pickup. But one striking difference is the $5,300 he pays in yearly property taxes — more than both his neighbors combined. The reason behind Burdick's disproportionate tax bill is Maryland's Homestead Property Tax Credit, which caps his neighbors' taxes but not his, because he moved to Riverside many years after they did. "I don't think it's fair," said Burdick, 37, who works in accounting.

Under recently amended legislation, owners of historic properties now have the option of taking a tax credit as a refund through Maryland's Heritage Structure Rehabilitation Tax Credit program, according to the state's Department of Housing and Community Development. The credit or refund is available to residents or businesses who use the program to renovate historic structures. Maryland's income tax credit is equal to 25 percent of the qualified rehabilitation costs of a certified heritage structure.

The Senate gave preliminary approval yesterday to a bill that would allow businesses to receive $5 million in tax credits for sponsoring scholarships at private schools. In about 30 minutes of often-contentious debate on the chamber floor, lawmakers struck down multiple attempts to water down or limit the bill, which opponents say amounts to a public subsidy of private schools. Calling the bill a "sham" that will "chip away at public education in Maryland," Sen. Delores G. Kelley, a Baltimore County Democrat, urged her colleagues to defeat the measure.

About 14 million low-income families can get a small pay increase this year, compliments of Uncle Sam.If you qualify for the earned-income tax credit, why wait until April 15 to apply? You can get part of it in your paycheck between now and Dec. 31. Complete Form W-5 -- the Earned Income Credit Advance Payment Certificate -- and give it to your employer, who will calculate the amount you get.The earned-income credit is just what its name implies -- a tax credit that is applied to a family's earned income.

It's one of the biggest unknowns bugging would-be buyers of houses and condos this summer: Will Congress let the $8,000 nonrepayable tax credit for first-time purchasers expire as scheduled about three months from now? Or will the credit get a second life and be extended for six to 12 months, taking pressure off buyers, real estate agents and settlement companies? That's an especially urgent matter if you're a buyer just starting to shop and you see entry-level prices bottoming out or rebounding.

The article concerning homestead tax breaks given legislators for properties that are not their principal residences raises an interesting question: If Baltimore was to cross-reference licensed rental properties with those receiving the homestead credit - which yielded 1,700 taxpayers ineligible for the credit - why did the General Assembly have to force every homeowner to apply for the credit ("Home tax benefits wrongly accepted," Aug. 10)? Although I supported the 2007 legislation requiring the applications, it quickly became obvious that the legislature had thrown out the baby with the bathwater.