Earned-income tax credits may lift state economy

Thanks to a long-standing government program for low-income taxpayers, the Nevada economy can expect a $178 million shot in the arm during February.

Since 1975, the government has allowed low-income workers to claim earned-income tax credits on their federal income taxes.

"The whole idea of the EITC is to reward people for working," Internal Revenue Service official David Williams said during a conference call Thursday.

Last year, 162,000 Nevada taxpayers received $296 million from the credits, which range from a few hundred to a few thousand dollars.

The IRS figures nationally that 60 percent of EITC recipients claim the credit, which often comes in the form of a check, in February.

Employers are required to provide W-2 income statements to workers by Feb. 1. So many people seek a refund for the tax credit at the earliest opportunity.

The maximum credit is $4,716 for a family with two or more children; $2,853 for a family with one child; and $428 for those with no children. A couple with two or more children may qualify if they earn less than $37,783.

Although many EITC recipients are anxious to get paid, the IRS estimates that about one-quarter of eligible taxpayers nationally don't claim the credit, often because they didn't know of the credit or didn't know how to get it.

The IRS recommends that low-income working people in Nevada, including members of the armed forces and noncitizens, claim the credit as soon as possible.

Many enlisted men and women in the armed forces are entitled to the EITC, but officials urged these individuals to visit the irs.gov Web site for details concerning matters such as combat pay.

Eligible immigrants without U.S. citizenship may claim the EITC if they, their spouse and children have valid Social Security numbers.

"You can have a valid Social Security number without being a citizen," Williams said.

IRS officials said taxpayers can get quick refund checks for the EITC or for tax overpayments in 2007 and may not need tax-anticipation notes that some tax preparation firms offer.

If the taxpayer files the return electronically and directs the IRS to send the refund payment to a bank account, the taxpayer often can get payment within 10 days, said Debra Holland, another IRS official.

IRS officials said between 23 and 28 percent of EITC claims should not have been made, based on a study of 1999 data. A large portion of the IRS audits involve EITC claims, officials said.

"We think a lot of it may be confusion or lack of clarity," Williams said.

IRS spokesman Raphael Tulino said taxpayers can get the number and location of the closest site for free tax help by calling 211. AARP sites can be found by going to http://www.aarp.org/money/taxaide/ on the Internet. Or the taxpayer may call the IRS national number, (800) 829-1040.

The IRS warned taxpayers to disregard telephone calls and e-mails promising income-tax refunds. The IRS doesn't make calls or use e-mails to notify taxpayers of refunds. Criminals often make the calls and send the e-mails, seeking to get confidential information from individuals.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or (702) 383-0420.