The Providence Journal
By: Neil Downing
January 26, 2010
PROVIDENCE - A program known as the earned income credit can help lift people out of poverty.
That is what Deanna "DeeDee" Brown said on Monday, and for evidence, she pointed to her own life experience. Growing up at a public housing project in the city's West End, she said she knew hard times.
But she also watched her mother apply money from the earned income credit toward a down payment on a house, she said. And the credit helped Brown herself buy a reliable car and go to college, she said.
Government, nonprofit and business leaders gathered Monday at John Hope Settlement House, a community center in the West End, to draw attention to the benefits of the earned income credit and to urge eligible people to apply.
The earned income credit (also known as the earned income tax credit, EIC, or EITC) is a tax break for the working poor. It is claimed on one's federal income-tax return. It generally puts money into the pockets of low-income families -- even if they do not ordinarily pay income taxes.
Peter D. Lee, president and CEO of John Hope Settlement House, said that the earned income credit is the nation's largest and most important antipoverty program.
Sen. Sheldon Whitehouse, D-R.I., said that nearly 75,000 Rhode Island households claimed the credit, receiving a combined total of $140 million for the 2007 tax year, the latest period for which detailed figures are available.
Such funds are available during the current tax-filing season for those who are eligible to claim it, Whitehouse said. "The money is out there waiting for us," he said.
Providence Mayor David N. Cicilline said that the credit can help families that are in need, families that are "living on the edge." Money from the credit can help families pay for utilities, rent, food and other such expenses, he said.
To qualify for the credit, a person must have "earned income" -- money from a job. In general, a worker may obtain the credit if the amount of the worker's adjusted gross income, or AGI, falls below a certain threshold. (AGI is a figure found on the front of the tax return, toward the bottom.) Following are some guidelines for the 2009 tax year:
•For a household with three or more qualifying children, the income limit is generally $43,279 for someone who is single, $48,279 for a married couple filing a joint return. The maximum credit is $5,657.
•For a household with two qualifying children, the limit is generally $40,295 for someone who is single, $45,295 for a married couple. The maximum credit is $5,028.
•For a household with one qualifying child, the income limit is generally $35,463 for someone who is single, $40,463 for a married couple. The maximum credit is $3,043.
•For a household with no qualifying children, the limit is generally $13,440 for someone who is single, $18,440 for a married couple. The maximum credit is $457.
Fred McElligott, an area director for the Internal Revenue Service, said that, nationwide, about 24.2 million households received about $49.9 billion in earned income credits last year.
In the Providence area, a group of organizations collectively called the Providence EITC initiative prepared nearly 1,700 federal income tax returns for Providence area residents last year at no charge, he said.
Those returns generated about $2.6 million in federal income tax refunds, including about $1.1 million in earned income credits, he said.
People cannot obtain the credit if they do not file federal income-tax returns. But they can get their returns prepared and filed at no charge by visiting a number of volunteer tax-preparation sites located throughout the state, many of them operated through the IRS's Volunteer Income Tax Assistance (VITA) program.
Anthony Maione, president and CEO of United Way of Rhode Island, said that people may call the United Way's hotline by dialing 211 to obtain locations, hours and other details about the VITA sites.
(The 211 line, a free service for callers, fielded 120,000 calls last year, including calls about tax matters, Maione said.)
Vivian Moreno is CEO of The Interpreters Network Inc., a Providence firm that provides interpreting and translation services. She also is the coordinator of a VITA site on Broad Street in Providence, and said that the earned income credit is intended to "break the cycle of poverty."
Brown, 36, of Providence, creative director for the People's School, a community arts school in Providence, said that the credit helped her pay for her education at Johnson & Wales University, where she obtained an associate's degree in business administration. The credit also serves as an incentive for her to find a job. "It helped me rise out of poverty. It was a bridge," she said.
By the numbers: What the earned income credit means to Rhode Island
74,630: Number of Rhode Island households that claimed the federal earned income tax credit
$140.58 million: Total amount of the earned income tax credit claimed by Rhode Island households
$1,884 Average earned income credit per Rhode Island household
Source: Internal Revenue Service, for 2007 tax year