Officials tout tax credit for poor

Forum aims to educate taxpayers

Friday, Feb. 26, 2010

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Staff photo by EMILY BARNES
Steven T. Miller, left, deputy commissioner of the Internal Revenue Service, listens as U.S. Rep. Steny H. Hoyer speaks during a meeting at the United Way of Charles County in La Plata on Monday.

One of every four filers who qualify for a federal and state tax credit designed to assist low-wage earners do not apply for it, leaving more than $100 million in refund money on the table in Maryland alone.

That's why local, state and federal officials gathered at the United Way of Charles County on Monday to publicize the Earned Income Tax Credit program by reaching out to community leaders who work primarily with financially disadvantaged citizens.

"The Earned Income Tax Credit is a great federal and state program to support working families and we want to make sure people maximize every single dollar of that," said Robin McKinney, director of the Maryland CASH campaign, a coalition of organizations that promote financial stability for working families.

The federal EITC, enacted in 1975 with bipartisan support and revamped several times since, is designed to combat poverty by giving a break to employed workers who earn low incomes. Many people who qualify for it are also eligible for free tax preparation.

Income thresholds range from $13,440 for a single filer with no children to $48,279 for a joint married filer with three or more children. The maximum credit for tax year 2009 is $5,657 for claimants with three or more children.

Getting the word out is especially important this year with the recession taking its toll on low-income earners, said Deputy IRS Commissioner Steven T. Miller.

The federal government paid out approximately $643 million through the earned income tax credits in Maryland to roughly 358,000 filers in tax year 2008 for an average refund of about $1,800 per return. The state handed out an additional $150 million, he said.

Nationally, about 24 million filers received nearly $50 billion through the earned income tax credit in 2008, said IRS spokesman Dean Patterson. That means roughly 8 million eligible Americans do not apply for the credit.

At Monday's forum, held in a small conference room with about three dozen attendees from the nonprofit and corporate world, Comptroller Peter V.R. Franchot told the story of a woman who received $1,100 through the tax credit. She spent $100 on school supplies for her children and used the rest to buy a used car that enabled her to get a higher-paying job. Now, she earns too much to be eligible for the credit.

That exemplifies how the tax credit can help lift working people out of poverty and the type of story that officials such as House Majority Leader Steny H. Hoyer, who hosted the discussion, hope to promote.

Churches would be a good way to disseminate information, suggested Joan Jones of the Bel Alton High School Alumni Association's Community Development Center.

One of the biggest gaps is providing tax preparation help. The only Volunteer Income Tax Assistance, or VITA, site in Southern Maryland this year is at the Tri-County Community Action Committee building in Hughesville. Prince George's County alone has four such volunteer centers.

Franchot (D) opened a local taxpayer service office on Monday, but he and other officials called on community organizations to help fill the void.

Tax preparation can cost up to $500, which is a big loss for those making just enough to scrape by, McKinney said.

"For us, free tax preparation is really the gateway into financial education and into savings," she said.

In 2006, 66 percent of EITC filers in Charles County used a paid tax preparer when they might have qualified for a free service, said McKinney, using the most recent data available. About 7,250 Charles County taxpayers received $12.9 million through the EITC in 2006, according to the data.

LifeStyles of Maryland, which is based in La Plata, served as a VITA site last year, helping about 60 people file their taxes, but the cost became too prohibitive to continue doing it in tough economic times, said Sandy Washington, the organization's director. She hopes to offer the service again beginning next year.

Another organization that expressed interest in becoming a VITA site is Walden Sierra, a substance abuse treatment facility in Charlotte Hall.

A group in Calvert County is trying a different approach. Volunteers with End Hunger in Calvert County train individuals how to do their own taxes, which can have a lasting effect, said Robin Brungard, the organization's program director.

More information on the federal or state earned income tax credits is available through the Internal Revenue Service (, the Maryland Comptroller ( or the Maryland CASH campaign (