Low and moderate-income workers in Wisconsin may be eligible for thousands of dollars of additional income at tax time. For many families, the federal Earned Income Tax Credit (EITC), together with the state Earned Income Credit, can bring in anywhere from a few dollars to more than $8,000, depending on household income and size. Both credits specifically target employed households, and are intended to supplement earnings from work. Workers can receive the credits even if their incomes are too low to pay any income taxes.
To help eligible households learn about the credits, UW-Extension has developed a website providing detailed information—including information on eligibility and benefits, links to tax forms, and more. The website, which can be found at https://fyi.extension.wisc.edu/eitc/, also provides resources for groups interested in helping to get the word out about the tax credits.
“Because many working families have wages that are not high enough to cover basic needs, these tax credits are a critical income source,” says Judith Bartfeld, UW-Extension food security research and policy specialist and professor at UW-Madison. “This additional income benefits not only the workers who receive it, but also the communities in which they live because much of the money goes right back into the local economy.”
Extension educators do not prepare taxes or provide tax advice, but they provide access to resources and information for Wisconsin residents.”
People qualify for the EITC based on earnings during 2013, and they must have at least some earnings from work to qualify. Incomes can be as high as $46,227 for unmarried households and $51,567 for married households. The specific income limits also depend on the number of children in the household, with the highest income cutoffs for households with three or more children.
The federal earned income credit ranges from a few dollars up to $6,044. The Wisconsin credit is worth up to $2,055–which working parents can receive in addition to the federal credit. Both credits are higher when there are more children in the household, with the largest credit for those with three or more children. The amount of the credits also depends on the amount of income; the credits decline in value as income approaches the cut-off.
To claim the federal credit, eligible people must file federal income tax returns and specifically claim the credit. Likewise, workers must file a Wisconsin tax return to receive the state credit. While some people are eligible for the tax credit in most years and are already familiar with how it works, others may be newly eligible –and more likely to miss out.
Those most likely to be eligible, yet not file a claim, include people with recent changes in circumstances, people in nontraditional families such as grandparents who are raising grandchildren, non-English speakers, and those whose income is too low to otherwise have to file tax returns.
The IRS estimates that up to one in five eligible workers fails to claim the credit, potentially foregoing thousands of dollars. Workers who are new to Wisconsin may be familiar with the federal credit, but might not know that a state credit is also available.
In addition to the federal and state EITC, there is also a state Homestead Credit. This is worth up to $1,160, and is available to both renters and homeowners with incomes of less than $24,680. The specific amount depends on income. The purpose of this credit is to offset the impact of rent and property taxes on low- and moderate-income households.
For individualized free help in filing taxes and claiming tax credits, taxpayers can visit a Volunteer Income Tax Assistance (VITA) or Tax Credit for the Elderly (TCE) site that provides service to low and middle-income tax filers.
To find a VITA site near you, visit https://fyi.extension.wisc.edu/eitc/vita-sites/
To find a TCE site near you, visit: http://www.aarp.org/money/taxaide/.
To help tax preparers determine your eligibility for the EITC, bring along as much of the following information as possible:
–Photo identification
–Valid Social Security cards for the taxpayer, spouse and dependents
–Birth dates for primary, secondary and dependents listed on the return
–Current year’s tax package, if received
–Wage and earning statements—Form W-2, W-2G, 1099-R from all employers
–Interest and dividend statements from banks (Form 1099)
–Copy of last year’s federal and state returns, if available
–Bank routing numbers and account numbers for direct deposit
–Any other relevant information about income and expenses
–Total paid for day care
–Day care provider’s identifying number
For more information, visit the IRS website at http://www.eitc.irs.gov/central/main/
Information provided by Shelley Tidemann, Fond du Lac County UWEX Family Living Educator.
