By: Tara Lynn Wagner
March 18, 2010
The Internal Revenue Service says when it comes to filing taxes, mistakes are pretty common, but taxpayers are more likely to not take appropriate tax breaks.
For example, qualified taxpayers may not know about the Earned Income Tax Credit, which is basically a tax break for people who do work but do not earn a lot of money. In a normal year, the IRS estimates that one out of every four eligible taxpayers does not take advantage of the EITC, and IRS officials guess the number could be higher this year.
"This year, we're very concerned that, because of the economy, there may be many [qualified] people who, in past years, made too much money to qualify," says Williams. "This year, they may have lost a job, they may have reduced pay, they may be working part-time. They may be eligible for the credit and they may not know it."
Also, for the 2009 tax year, the credit was increased and the eligibility rules were expanded. Under the new rules, a married couple with three or more children making less than $48,000 a year could qualify for the maximum credit of $5,657.
"It's huge. It's the biggest check people will see during the course of the year," says Williams. "We hear anecdotally from people that's it make an enormous difference when it comes to paying for things for your kids, taking care of that car payment. It really can be life-changing."
The credit also benefits the community, since the check money will pass from the individual to countless hands. It trickles down into the local economy, generates business and may even help create jobs.
"You may be out buying a car to get yourself to work. If you can't get to work, well then, that has a ripple effect for your family and the economy. You may need to put food on your table, buy things for your kids," says Williams. "All of those kinds of activities are really important to supporting not just your family but the community at large."
For help in determining if you are eligible for the Earned Income Tax Credit, visit www.irs.gov or stop by one of the 12,000 Volunteer Income Tax Assistance sites around the country. To find the site nearest you, call 1-800-906-9887.