Group seeks to spread the word about EITC

Michelle Bourgeois is one of the lucky ones. Thanks to a tax preparation service offered, free of charge, in the Franklin area Bourgeois learned early on about the federal Earned Income Tax Credit available to low- and moderate-income workers.

The 26-year-old single mother is one of nearly 62,000 eligible workers from New Hampshire who received, collectively, more than $95.4 million through the EITC in 2005. EITC refunds in New Hampshire averaged $1,538 for the year, and some were more than $4,000.

But the total could be much higher. According to Gregg Woodes, senior tax specialist for the Internal Revenue Service, New Hampshire has the lowest EITC participation rate in the country, with an estimated 19 percent of eligible workers neglecting to file for the EITC.

“What often happens is people think they didn’t earn enough over the year so they don’t bother filing,” Woodes said. “It’s so important that everyone file, especially if you have young children. Available credits like the EITC make it well worthwhile.”

The New Hampshire Earned Income Tax Credit Project, an initiative launched forth by the University of New Hampshire Cooperative Extension is committed to increasing the number of New Hampshire workers participating in the EITC.

“When President Nixon put this legislation into effect in 1974 it was to promote work and put money in the pockets of our lower-income workers,” said Valerie Long, director of the project. “And we are all about finding the most effective way of reaching these workers, of putting more money into their pockets.”

According to the IRS, credits for tax year 2006 can run as high as $4,536 for workers with two or more qualifying children.

Eligibility for the credit is based on adjusted gross income and earned income, along with the number of qualifying children.

Those with two or more qualifying children and income below $36,348 ($38,348 if filing jointly) for tax year 2006 are eligible for an EITC.

Workers with one qualifying child and income below $32,001 ($34,001 if filing jointly) also qualify, as do workers with no children earning less than $12,120 ($14,120 if filing jointly).

Similar to the EITC, the Advanced Earned Income Tax Credit allows eligible workers to receive a portion of their anticipated tax credit over the course of the year.

Woodes said the maximum AEITC allowed for tax year 2007 is $1,712.

AEITC is available to workers with one qualifying child who expect to earn less than $33,241 ($35,241 filing jointly) this year.

“This could mean the difference between heat in the winter and no heat, electricity and no electricity, food and no food, rent money and no rent money,” said Long.

Extensive partnership

Why then, after more than two decades, does so much of the EITC money still remain unclaimed each year?

Now in its third year, the NHEITC Project has not only begun to answer that question, but is taking steps necessary to reverse this trend.

So far, this has meant increasing the number of free tax service sites across the state and disseminating information about the EITC and other asset-building services via appropriate work sites, media campaigns and workshops.

The formation two years ago of the New Hampshire Earned Income Tax Credit Alliance – a joint effort of organizations committed to the EITC, asset building, community development and education – has been instrumental in educating New Hampshire workers about the importance of tax credits and building assets, said Long.

“We’re trying to make the best use of all the resources we have in the state,” she said.

The partnership of the EITC Project, alliance members, AARP and the IRS SPEC (stakeholders partnership education communication) Unit, has resulted in an increased number of Volunteer Income Tax Assistance (VITA) sites where EITC-eligible workers can obtain assistance in preparing their annual income tax free of charge – and it’s a perfect example of the collaborative efforts of the alliance.

In addition to the VITA sites, alliance members are taking their expertise on the road, hosting workshops throughout the state.

The alliance’s extensive partnership also has enabled the EITC Project to assist workers like Bourgeois – an employee in the state Bureau of Securities Regulation — in developing plans for asset building, higher education and home ownership.

“As a single mom, it is important for me to maintain my self-determination and independence while trying to succeed in achieving one of life’s ultimate goals of owning a home on my own,” said Bourgeois who is not only able to keep more of her annual income through the EITC, but also is taking part in an education savings plan through the “Smart CD” program offered by alliance partner Franklin Savings Bank. Bourgeois also said she is looking forward to purchasing her first home, thanks to an “Individual Development Account” that offers a three-to-one match on money she saves for just that purpose. “Help from programs like IDA allows me to accomplish this goal.”

A recent survey of 56 New Hampshire companies conducted by UNH Cooperative Extension’s Family Resource Management Program indicates that the majority of the businesses in industries likely to employ low- and moderate-wage workers did not distribute EITC/AEITC information in-house. Most, however, said they would like to receive and distribute information on these tax credits.

The survey also indicates that many companies would agree to go so far as becoming a free IRS-certified tax preparation site as a benefit to their employees.

According to Long, the ability to work with such companies and the support of other businesses throughout the state could prove to be the perfect venue through which to get the word out about the availability of the EITC and other services offered through the New Hampshire EITC Project.

For more information about the Earned Income Tax Credit or the NHEITC Project visit nheitc.org or call 877-398-4769.