‘Taxes’ and ‘fun’ — those two words in one sentence? The National Women’s Law Center is floating some family helpers that make such a combination almost possible. In today’s economic hard times, discovery of a few dollars remaining at home rather than going to Washington can be downright euphoric.
As W-2s and 1099s start appearing in mailboxes once again, kicking off the agonizing annual countdown to April 15, Americans must begin gearing up to discharge that most dreaded of citizenly duties: filing their taxes. In celebration of the venerable but oft-neglected holiday, “Earned Income Tax Credit Awareness Day,” we here at the National Women’s Law Center want to let you know that this year is different. This year, filing taxes can be…well, “fun” might be taking it too far. How about “marginally less unpleasant”?
We all know that more low- and moderate-income families than ever are struggling financially. But fortunately, thanks to the American Recovery and Reinvestment Act of 2009, more help than ever is available to those families in the form of tax credits.
Quick tax lesson – don’t run away: in general, a tax credit simply lowers the amount a family owes in income taxes. However, for some tax credits, even if a family owes little or nothing in income taxes, it can receive the value of the credit – sometimes thousands of dollars – as a refund. This means that for the families who are in the direst of financial straits, tax credits can be essential to survival (and you thought taxes were boring).
Pointing out that billions of dollars in tax credits go unclaimed every year, simply because eligible families don’t file for them, NWLC lists a few of the potential savings:
• The Earned Income Tax Credit supplements the wages of low- and moderate-income families. It is worth up to $5,657 (depending on income and number of children) and is refundable.
• The Child Tax Credit helps families with the costs of raising children. It is worth up to $1,000 per child (for up to three children) and is refundable for some families.
• The Child and Dependent Care Tax Credit covers some of the child or dependent care costs that families incur in order to work. It is worth up to $2,100 but is not refundable.
• The new Making Work Pay Credit increases families’ take-home pay. It is worth up to $400 for single tax filers or $800 for married couples and is refundable.
Some states offer similar tax credits, and because the value of many state credits is tied to the value of the federal credits, families could be eligible for more assistance than last year through their state tax returns as well.
The new law increased the maximum value of some existing federal tax credits designed to help working families and families with children, and it also established a brand-new credit. So this year, a family could be eligible for some or all of the following:
NWLC invites you to visit their site for details about these tax credits and tools to get the information for people who need it. “One final piece of good news,” they add: “families can get free help with preparing their tax returns. Call the IRS at 1-800-TAX-1040 to find your nearest Volunteer Income Tax Assistance location.” So go for it. Save a buck, have a ball. You might be able to chuckle all the way to the filing deadline.