Earned Income Credit – a sometimes unclaimed benefit for the disabled

There are many disabled people in the United States who are not taking advantage of a credit offered to them by the Internal Revenue Service called the Earned Income Credit. This was originally provided as an anti-poverty program for hard working low income employees aimed at reducing taxes.

Many individuals who are disabled do not file a tax return, as they do not believe that they have made enough money to do so. However, by not filing a return, they may be failing to claim funds that may be due them through a tax credit. Rather than merely a reduction of earned income or an itemized deduction, this Earned Income Credit is a direct credit against the tax, if there is one, and if not, then the tax payer is entitled to receive a refund of this credit.

A qualified person may receive a credit up to $428, with a family of two or more children being able to receive up to $4,716! However, the credit is not going to be paid unless it is claimed on the return.

Many people may not be filing a tax return because they fear they will lose governmental benefits if they receive too much of a refund. Included in this situation are people with disabilities who receive supplemental security income (SSI) or Medicaid, since these people may not have more than $2,000 in assets, or possibly income above a certain level based on where they are living and what programs they are receiving. However, the earned income credit does not count as income in determining eligibility for benefits such as cash assistance, Medicaid, food stamps, SSI or public housing.

Naturally, there are limits for individuals to claim the refund, and for 2007, the calculations are as follows:

1. A person who has no children must have income below $12,590.
2. A person with a child must have income below $33,241.
3. A person with two or more children must have income below $37,783.

It is estimated according to 2000 Census, that there are over 22,000,000 individuals between the ages of 18 and 64 who have a disability. Approximately one-fourth of these individuals have total annual income of less than $15,000, and 83% of the people surveyed stated that they had never claimed an income tax credit.

The government designated January 31, 2008, as Earned Income Tax Credit Day. Each year, the government designates a day to attempt to encourage more people with disabilities to file their taxes and apply for the credit.

In order to claim this credit, a return must be filed, but if there is no availability to claim the credit by a person who may not be able to file their own return, they should attempt to contact their local disability center or senior citizen center, who should have the forms available to file the return online. By filing an online return, the person may have their credit deposited directly into their bank account, and thus be more expeditious than if a manual check has to be issued.

By: Hyman G. Darling, Esq.

Comments

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People who are disabled or those who hold low-paying jobs may be eligible for the EITC. This credit can put money in your pocket even if you didn't have any income tax withheld. This cash transfer program also successfully meets its explicit goal of encouraging low-income parents to go to work by, in effect, lowering their tax rate and providing a financial bonus for that work effort. It has been especially effective in encouraging single parents, particularly women, to obtain employment.
As mentioned above, the EIC was originally introduced as financial assistance.